Correlation Between Shinhan Financial and Texas Rare
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Texas Rare 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 Texas Rare 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 Texas Rare Earth, you can compare the effects of market volatilities on Shinhan Financial and Texas Rare 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 Texas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Texas Rare.
Diversification Opportunities for Shinhan Financial and Texas Rare
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinhan and Texas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Texas Rare Earth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Rare Earth 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 Texas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Rare Earth has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Texas Rare go up and down completely randomly.
Pair Corralation between Shinhan Financial and Texas Rare
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.35 times more return on investment than Texas Rare. However, Shinhan Financial Group is 2.83 times less risky than Texas Rare. It trades about 0.05 of its potential returns per unit of risk. Texas Rare Earth is currently generating about -0.04 per unit of risk. If you would invest 2,582 in Shinhan Financial Group on August 26, 2024 and sell it today you would earn a total of 1,393 from holding Shinhan Financial Group or generate 53.95% 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. Texas Rare Earth
Performance |
| Timeline |
| Shinhan Financial |
| Texas Rare Earth |
Shinhan Financial and Texas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and Texas Rare
The main advantage of trading using opposite Shinhan Financial and Texas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Texas Rare 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 Texas Rare will offset losses from the drop in Texas Rare'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 |
| Texas Rare vs. Ucore Rare Metals | Texas Rare vs. Lynas Rare Earths | Texas Rare vs. Arafura Resources | Texas Rare vs. Commerce Resources Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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