Correlation Between Shinhan Financial and Daesung Private

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

Diversification Opportunities for Shinhan Financial and Daesung Private

0.52

Correlation Coefficient

Shinhan Financial  Daesung Private

Very weak diversification

The 3 months correlation between Shinhan and Daesung is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Daesung Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Private Equity 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 Daesung Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Private Equity has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Daesung Private go up and down completely randomly.

Pair Corralation between Shinhan Financial and Daesung Private

Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 0.55 times more return on investment than Daesung Private. However, Shinhan Financial Group is 1.81 times less risky than Daesung Private. It trades about 0.07 of its potential returns per unit of risk. Daesung Private Equity is currently generating about 0.0 per unit of risk. If you would invest  3,143,584  in Shinhan Financial Group on September 12, 2024 and sell it today you would earn a total of  1,851,416  from holding Shinhan Financial Group or generate 58.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Shinhan Financial Group  vs.  Daesung Private Equity

Shinhan Financial

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, Shinhan Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Daesung Private Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daesung Private Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Daesung Private is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shinhan Financial and Daesung Private

The main advantage of trading using opposite Shinhan Financial and Daesung Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Daesung Private 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 Daesung Private will offset losses from the drop in Daesung Private's long position.

The idea behind Shinhan Financial Group and Daesung Private Equity 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.