Correlation Between Heungkuk Metaltech and Shinhan Financial

Can any of the company-specific risk be diversified away by investing in both Heungkuk Metaltech and Shinhan Financial 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 Heungkuk Metaltech and Shinhan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heungkuk Metaltech CoLtd and Shinhan Financial Group, you can compare the effects of market volatilities on Heungkuk Metaltech and Shinhan Financial 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 Heungkuk Metaltech with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and Shinhan Financial.

Diversification Opportunities for Heungkuk Metaltech and Shinhan Financial

-0.82

Correlation Coefficient

Heungkuk Metaltech  Shinhan Financial

Pay attention - limited upside

The 3 months correlation between Heungkuk and Shinhan is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and Shinhan Financial go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and Shinhan Financial

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 1.92 times more return on investment than Shinhan Financial. However, Heungkuk Metaltech is 1.92 times more volatile than Shinhan Financial Group. It trades about 0.15 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.02 per unit of risk. If you would invest  498,265  in Heungkuk Metaltech CoLtd on October 22, 2024 and sell it today you would earn a total of  23,735  from holding Heungkuk Metaltech CoLtd or generate 4.76% return on investment over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  Shinhan Financial Group

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heungkuk Metaltech CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heungkuk Metaltech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Heungkuk Metaltech and Shinhan Financial

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

The idea behind Heungkuk Metaltech CoLtd and Shinhan Financial Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.