Correlation Between Shinhan Financial and Bristol Myers

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

Diversification Opportunities for Shinhan Financial and Bristol Myers

-0.74

Correlation Coefficient

Shinhan Financial  Bristol Myers

Pay attention - limited upside

The 3 months correlation between Shinhan and Bristol is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb 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 Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Bristol Myers go up and down completely randomly.

Pair Corralation between Shinhan Financial and Bristol Myers

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Bristol Myers. In addition to that, Shinhan Financial is 1.17 times more volatile than Bristol Myers Squibb. It trades about -0.05 of its total potential returns per unit of risk. Bristol Myers Squibb is currently generating about 0.14 per unit of volatility. If you would invest  4,996  in Bristol Myers Squibb on September 1, 2024 and sell it today you would earn a total of  926.00  from holding Bristol Myers Squibb or generate 18.53% return on investment over 90 days.

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

Shinhan Financial Group  vs.  Bristol Myers Squibb

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 technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Bristol Myers Squibb

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bristol Myers Squibb are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Bristol Myers showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Bristol Myers

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

The idea behind Shinhan Financial Group and Bristol Myers Squibb 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.