Correlation Between Shinhan Financial and Reata Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Reata Pharmaceuticals 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 Reata Pharmaceuticals 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 Reata Pharmaceuticals, you can compare the effects of market volatilities on Shinhan Financial and Reata Pharmaceuticals 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 Reata Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Reata Pharmaceuticals.
Diversification Opportunities for Shinhan Financial and Reata Pharmaceuticals
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinhan and Reata is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Reata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reata Pharmaceuticals 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 Reata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reata Pharmaceuticals has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Reata Pharmaceuticals go up and down completely randomly.
Pair Corralation between Shinhan Financial and Reata Pharmaceuticals
If you would invest 2,933 in Shinhan Financial Group on August 28, 2024 and sell it today you would earn a total of 1,071 from holding Shinhan Financial Group or generate 36.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.48% |
| Values | Daily Returns |
Shinhan Financial Group vs. Reata Pharmaceuticals
Performance |
| Timeline |
| Shinhan Financial |
| Reata Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shinhan Financial and Reata Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Reata Pharmaceuticals
The main advantage of trading using opposite Shinhan Financial and Reata Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Reata Pharmaceuticals 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 Reata Pharmaceuticals will offset losses from the drop in Reata Pharmaceuticals' long position.| Shinhan Financial vs. Banco Santander Brasil | Shinhan Financial vs. CrossFirst Bankshares | Shinhan Financial vs. Banco Bradesco SA | Shinhan Financial vs. CF Bankshares |
| Reata Pharmaceuticals vs. Sarepta Therapeutics | Reata Pharmaceuticals vs. Krystal Biotech | Reata Pharmaceuticals vs. PTC Therapeutics | Reata Pharmaceuticals vs. Madrigal Pharmaceuticals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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