Correlation Between Shinhan Financial and Curo Holdings

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

Diversification Opportunities for Shinhan Financial and Curo Holdings

0.66

Correlation Coefficient

Shinhan Financial  Curo Holdings

Poor diversification

The 3 months correlation between Shinhan and Curo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Curo Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curo Holdings 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 Curo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curo Holdings has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Curo Holdings go up and down completely randomly.

Pair Corralation between Shinhan Financial and Curo Holdings

Assuming the 90 days trading horizon Shinhan Financial Group is expected to generate 1.93 times more return on investment than Curo Holdings. However, Shinhan Financial is 1.93 times more volatile than Curo Holdings Co. It trades about -0.2 of its potential returns per unit of risk. Curo Holdings Co is currently generating about -0.86 per unit of risk. If you would invest  5,510,000  in Shinhan Financial Group on September 28, 2024 and sell it today you would lose (620,000) from holding Shinhan Financial Group or give up 11.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.57%
Values	Daily Returns

Shinhan Financial Group  vs.  Curo Holdings Co

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Curo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Curo Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shinhan Financial and Curo Holdings

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

The idea behind Shinhan Financial Group and Curo Holdings Co 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.