Correlation Between Shinhan Financial and Atacama Resources

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

Diversification Opportunities for Shinhan Financial and Atacama Resources

-0.54

Correlation Coefficient

Shinhan Financial  Atacama Resources

Excellent diversification

The 3 months correlation between Shinhan and Atacama is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Atacama Resources Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atacama Resources 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 Atacama Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atacama Resources has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Atacama Resources go up and down completely randomly.

Pair Corralation between Shinhan Financial and Atacama Resources

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Atacama Resources. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 10.67 times less risky than Atacama Resources. The stock trades about -0.12 of its potential returns per unit of risk. The Atacama Resources International is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.17  in Atacama Resources International on September 16, 2024 and sell it today you would earn a total of  0.23  from holding Atacama Resources International or generate 135.29% return on investment over 90 days.

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

Shinhan Financial Group  vs.  Atacama Resources Internationa

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 weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atacama Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atacama Resources International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Atacama Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Atacama Resources

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

The idea behind Shinhan Financial Group and Atacama Resources International 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.