Correlation Between Shinhan Financial and Sumitomo Corp
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Sumitomo Corp 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 Sumitomo Corp 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 Sumitomo Corp ADR, you can compare the effects of market volatilities on Shinhan Financial and Sumitomo Corp 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 Sumitomo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Sumitomo Corp.
Diversification Opportunities for Shinhan Financial and Sumitomo Corp
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shinhan and Sumitomo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Sumitomo Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Corp ADR 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 Sumitomo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Corp ADR has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Sumitomo Corp go up and down completely randomly.
Pair Corralation between Shinhan Financial and Sumitomo Corp
Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Sumitomo Corp. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 1.56 times less risky than Sumitomo Corp. The stock trades about -0.17 of its potential returns per unit of risk. The Sumitomo Corp ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,108 in Sumitomo Corp ADR on November 22, 2024 and sell it today you would earn a total of 53.00 from holding Sumitomo Corp ADR or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. Sumitomo Corp ADR
Performance |
| Timeline |
| Shinhan Financial |
| Sumitomo Corp ADR |
Shinhan Financial and Sumitomo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Sumitomo Corp
The main advantage of trading using opposite Shinhan Financial and Sumitomo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Sumitomo Corp 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 Sumitomo Corp will offset losses from the drop in Sumitomo Corp'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 |
| Sumitomo Corp vs. Itochu Corp ADR | Sumitomo Corp vs. Mitsubishi Corp | Sumitomo Corp vs. ITOCHU | Sumitomo Corp vs. Marubeni Corp 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |