Correlation Between Shinhan Financial and Daou Tech
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Daou Tech 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 Daou Tech 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 Daou Tech, you can compare the effects of market volatilities on Shinhan Financial and Daou Tech 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 Daou Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Daou Tech.
Diversification Opportunities for Shinhan Financial and Daou Tech
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Daou is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Daou Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Tech 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 Daou Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Tech has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Daou Tech go up and down completely randomly.
Pair Corralation between Shinhan Financial and Daou Tech
Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the Daou Tech. In addition to that, Shinhan Financial is 2.13 times more volatile than Daou Tech. It trades about -0.08 of its total potential returns per unit of risk. Daou Tech is currently generating about -0.03 per unit of volatility. If you would invest 1,832,000 in Daou Tech on September 26, 2024 and sell it today you would lose (39,000) from holding Daou Tech or give up 2.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Shinhan Financial Group vs. Daou Tech
Performance |
Timeline |
Shinhan Financial |
Daou Tech |
Shinhan Financial and Daou Tech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shinhan Financial and Daou Tech
The main advantage of trading using opposite Shinhan Financial and Daou Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Daou Tech 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 Daou Tech will offset losses from the drop in Daou Tech's long position.Shinhan Financial vs. Samyang Foods Co | Shinhan Financial vs. Handok Clean Tech | Shinhan Financial vs. FOODWELL Co | Shinhan Financial vs. Lotte Non Life Insurance |
Daou Tech vs. KB Financial Group | Daou Tech vs. Shinhan Financial Group | Daou Tech vs. Hyundai Motor | Daou Tech vs. Hyundai Motor Co |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |