Correlation Between Shinhan Financial and Element 29

Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Element 29 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 Element 29 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 Element 29 Resources, you can compare the effects of market volatilities on Shinhan Financial and Element 29 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 Element 29. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Element 29.

Diversification Opportunities for Shinhan Financial and Element 29

-0.73

Correlation Coefficient

Shinhan Financial  Element 29

Pay attention - limited upside

The 3 months correlation between Shinhan and Element is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Element 29 Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element 29 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 Element 29. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element 29 Resources has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Element 29 go up and down completely randomly.

Pair Corralation between Shinhan Financial and Element 29

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Element 29. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 2.56 times less risky than Element 29. The stock trades about -0.05 of its potential returns per unit of risk. The Element 29 Resources is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Element 29 Resources on September 2, 2024 and sell it today you would earn a total of  19.00  from holding Element 29 Resources or generate 90.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Shinhan Financial Group  vs.  Element 29 Resources

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.

Element 29 Resources

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Element 29 Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Element 29 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Element 29

The main advantage of trading using opposite Shinhan Financial and Element 29 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Element 29 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 Element 29 will offset losses from the drop in Element 29's long position.

The idea behind Shinhan Financial Group and Element 29 Resources 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.