Correlation Between Shinhan Financial and SK Telecom
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and SK Telecom 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 SK Telecom 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 SK Telecom Co, you can compare the effects of market volatilities on Shinhan Financial and SK Telecom 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 SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and SK Telecom.
Diversification Opportunities for Shinhan Financial and SK Telecom
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and SKM is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom 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 SK Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Telecom has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and SK Telecom go up and down completely randomly.
Pair Corralation between Shinhan Financial and SK Telecom
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 1.87 times more return on investment than SK Telecom. However, Shinhan Financial is 1.87 times more volatile than SK Telecom Co. It trades about 0.03 of its potential returns per unit of risk. SK Telecom Co is currently generating about 0.03 per unit of risk. If you would invest 3,120 in Shinhan Financial Group on November 4, 2024 and sell it today you would earn a total of 382.00 from holding Shinhan Financial Group or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. SK Telecom Co
Performance |
| Timeline |
| Shinhan Financial |
| SK Telecom |
Shinhan Financial and SK Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and SK Telecom
The main advantage of trading using opposite Shinhan Financial and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, SK Telecom 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 SK Telecom will offset losses from the drop in SK Telecom'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 |
| SK Telecom vs. TIM Participacoes SA | SK Telecom vs. PLDT Inc ADR | SK Telecom vs. Liberty Broadband Srs | SK Telecom vs. Liberty Broadband Srs |
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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