Correlation Between Shinhan Financial and AfreecaTV

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

Diversification Opportunities for Shinhan Financial and AfreecaTV

-0.32

Correlation Coefficient

Shinhan Financial  AfreecaTV

Very good diversification

The 3 months correlation between Shinhan and AfreecaTV is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and AfreecaTV Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfreecaTV 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 AfreecaTV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfreecaTV has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and AfreecaTV go up and down completely randomly.

Pair Corralation between Shinhan Financial and AfreecaTV

Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the AfreecaTV. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 1.02 times less risky than AfreecaTV. The stock trades about -0.07 of its potential returns per unit of risk. The AfreecaTV Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  10,380,000  in AfreecaTV Co on September 23, 2024 and sell it today you would lose (1,220,000) from holding AfreecaTV Co or give up 11.75% of portfolio value over 90 days.

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

Shinhan Financial Group  vs.  AfreecaTV 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.

AfreecaTV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AfreecaTV Co 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.

Pair Trading with Shinhan Financial and AfreecaTV

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

The idea behind Shinhan Financial Group and AfreecaTV 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.