Correlation Between Shinhan Financial and SITC International
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and SITC International 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 SITC International 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 SITC International Holdings, you can compare the effects of market volatilities on Shinhan Financial and SITC International 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 SITC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and SITC International.
Diversification Opportunities for Shinhan Financial and SITC International
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shinhan and SITC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International 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 SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and SITC International go up and down completely randomly.
Pair Corralation between Shinhan Financial and SITC International
Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the SITC International. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 5.07 times less risky than SITC International. The stock trades about -0.05 of its potential returns per unit of risk. The SITC International Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,659 in SITC International Holdings on August 29, 2024 and sell it today you would earn a total of 67.00 from holding SITC International Holdings or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. SITC International Holdings
Performance |
| Timeline |
| Shinhan Financial |
| SITC International |
Shinhan Financial and SITC International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and SITC International
The main advantage of trading using opposite Shinhan Financial and SITC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, SITC International 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 SITC International will offset losses from the drop in SITC International'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 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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