Correlation Between Shinhan Financial and PetroShale
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and PetroShale at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shinhan Financial and PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Financial Group and PetroShale, you can compare the effects of market volatilities on Shinhan Financial and PetroShale and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shinhan Financial with a short position of PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and PetroShale.
Diversification Opportunities for Shinhan Financial and PetroShale
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shinhan and PetroShale is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale and Shinhan Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shinhan Financial Group are associated (or correlated) with PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and PetroShale go up and down completely randomly.
Pair Corralation between Shinhan Financial and PetroShale
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 1.55 times more return on investment than PetroShale. However, Shinhan Financial is 1.55 times more volatile than PetroShale. It trades about -0.01 of its potential returns per unit of risk. PetroShale is currently generating about -0.12 per unit of risk. If you would invest 4,047 in Shinhan Financial Group on August 28, 2024 and sell it today you would lose (43.00) from holding Shinhan Financial Group or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Shinhan Financial Group vs. PetroShale
Performance |
| Timeline |
| Shinhan Financial |
| PetroShale |
Shinhan Financial and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and PetroShale
The main advantage of trading using opposite Shinhan Financial and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, PetroShale can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PetroShale will offset losses from the drop in PetroShale's long position.| Shinhan Financial vs. Banco Santander Brasil | Shinhan Financial vs. CrossFirst Bankshares | Shinhan Financial vs. Banco Bradesco SA | Shinhan Financial vs. CF Bankshares |
| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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