Correlation Between Shinhan Financial and Pum Tech

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

Diversification Opportunities for Shinhan Financial and Pum Tech

-0.62

Correlation Coefficient

Shinhan Financial  Pum Tech

Excellent diversification

The 3 months correlation between Shinhan and Pum is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Pum Tech Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pum Tech Korea 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 Pum Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pum Tech Korea has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Pum Tech go up and down completely randomly.

Pair Corralation between Shinhan Financial and Pum Tech

Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the Pum Tech. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 1.37 times less risky than Pum Tech. The stock trades about -0.08 of its potential returns per unit of risk. The Pum Tech Korea Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,495,000  in Pum Tech Korea Co on September 26, 2024 and sell it today you would earn a total of  670,000  from holding Pum Tech Korea Co or generate 19.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Shinhan Financial Group  vs.  Pum Tech Korea 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.

Pum Tech Korea

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pum Tech Korea Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pum Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Pum Tech

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

The idea behind Shinhan Financial Group and Pum Tech Korea 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.