Correlation Between Shinhan Financial and Tempest Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Tempest Therapeutics 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 Tempest Therapeutics 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 Tempest Therapeutics, you can compare the effects of market volatilities on Shinhan Financial and Tempest Therapeutics 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 Tempest Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Tempest Therapeutics.

Diversification Opportunities for Shinhan Financial and Tempest Therapeutics

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shinhan and Tempest is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Tempest Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempest Therapeutics 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 Tempest Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempest Therapeutics has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Tempest Therapeutics go up and down completely randomly.

Pair Corralation between Shinhan Financial and Tempest Therapeutics

Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.37 times more return on investment than Tempest Therapeutics. However, Shinhan Financial Group is 2.73 times less risky than Tempest Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Tempest Therapeutics is currently generating about -0.13 per unit of risk. If you would invest  3,358  in Shinhan Financial Group on August 28, 2024 and sell it today you would earn a total of  646.00  from holding Shinhan Financial Group or generate 19.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Shinhan Financial Group  vs.  Tempest Therapeutics

 Performance 
       Timeline  
Shinhan Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shinhan Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Shinhan Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Tempest Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tempest Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Shinhan Financial and Tempest Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shinhan Financial and Tempest Therapeutics

The main advantage of trading using opposite Shinhan Financial and Tempest Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Tempest Therapeutics 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 Tempest Therapeutics will offset losses from the drop in Tempest Therapeutics' long position.
The idea behind Shinhan Financial Group and Tempest Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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