Correlation Between Shinhan Financial and PetIQ

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

Diversification Opportunities for Shinhan Financial and PetIQ

-0.47

Correlation Coefficient

Shinhan Financial  PetIQ

Very good diversification

The 3 months correlation between Shinhan and PetIQ is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and PetIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetIQ Inc 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 PetIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetIQ Inc has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and PetIQ go up and down completely randomly.

Pair Corralation between Shinhan Financial and PetIQ

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the PetIQ. In addition to that, Shinhan Financial is 28.5 times more volatile than PetIQ Inc. It trades about -0.21 of its total potential returns per unit of risk. PetIQ Inc is currently generating about 0.54 per unit of volatility. If you would invest  3,077  in PetIQ Inc on September 29, 2024 and sell it today you would earn a total of  21.00  from holding PetIQ Inc or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.75%
Values	Daily Returns

Shinhan Financial Group  vs.  PetIQ Inc

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.

PetIQ Inc

Risk-Adjusted Performance

0 of 100

Excellent

Over the last 90 days PetIQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PetIQ is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Shinhan Financial and PetIQ

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

The idea behind Shinhan Financial Group and PetIQ Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.