Correlation Between Shinhan Financial and Vale Indonesia
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Vale Indonesia 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 Vale Indonesia 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 Vale Indonesia Tbk, you can compare the effects of market volatilities on Shinhan Financial and Vale Indonesia 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 Vale Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Vale Indonesia.
Diversification Opportunities for Shinhan Financial and Vale Indonesia
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shinhan and Vale is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Vale Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale Indonesia Tbk 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 Vale Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale Indonesia Tbk has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Vale Indonesia go up and down completely randomly.
Pair Corralation between Shinhan Financial and Vale Indonesia
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.95 times more return on investment than Vale Indonesia. However, Shinhan Financial Group is 1.05 times less risky than Vale Indonesia. It trades about 0.07 of its potential returns per unit of risk. Vale Indonesia Tbk is currently generating about -0.05 per unit of risk. If you would invest 2,540 in Shinhan Financial Group on August 31, 2024 and sell it today you would earn a total of 1,318 from holding Shinhan Financial Group or generate 51.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Shinhan Financial Group vs. Vale Indonesia Tbk
Performance |
| Timeline |
| Shinhan Financial |
| Vale Indonesia Tbk |
Shinhan Financial and Vale Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Vale Indonesia
The main advantage of trading using opposite Shinhan Financial and Vale Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Vale Indonesia 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 Vale Indonesia will offset losses from the drop in Vale Indonesia's long position.| Shinhan Financial vs. Community West Bancshares | Shinhan Financial vs. First Financial Northwest | Shinhan Financial vs. Ponce Financial Group | Shinhan Financial vs. Finwise Bancorp |
| Vale Indonesia vs. Vale SA ADR | Vale Indonesia vs. Rio Tinto ADR | Vale Indonesia vs. BHP Group Limited | Vale Indonesia vs. Glencore PLC ADR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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