Correlation Between Shinhan Financial and Altamira Gold

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

Diversification Opportunities for Shinhan Financial and Altamira Gold

-0.57

Correlation Coefficient

Shinhan Financial  Altamira Gold

Excellent diversification

The 3 months correlation between Shinhan and Altamira is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Altamira Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altamira Gold Corp 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 Altamira Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altamira Gold Corp has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Altamira Gold go up and down completely randomly.

Pair Corralation between Shinhan Financial and Altamira Gold

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Altamira Gold. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 2.58 times less risky than Altamira Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Altamira Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8.03  in Altamira Gold Corp on September 3, 2024 and sell it today you would earn a total of  1.40  from holding Altamira Gold Corp or generate 17.43% 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.  Altamira Gold Corp

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 unfluctuating 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.

Altamira Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altamira Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altamira Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Altamira Gold

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

The idea behind Shinhan Financial Group and Altamira Gold Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.