Correlation Between Q Capital and Shinhan Financial

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

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

Diversification Opportunities for Q Capital and Shinhan Financial

-0.17

Correlation Coefficient

Q Capital  Shinhan Financial

Good diversification

The 3 months correlation between 016600 and Shinhan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Q Capital Partners and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Q Capital 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 Q Capital Partners 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 Q Capital i.e., Q Capital and Shinhan Financial go up and down completely randomly.

Pair Corralation between Q Capital and Shinhan Financial

Assuming the 90 days trading horizon Q Capital Partners is expected to generate 1.88 times more return on investment than Shinhan Financial. However, Q Capital is 1.88 times more volatile than Shinhan Financial Group. It trades about 0.07 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.01 per unit of risk. If you would invest  23,800  in Q Capital Partners on December 25, 2024 and sell it today you would earn a total of  2,300  from holding Q Capital Partners or generate 9.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Q Capital Partners  vs.  Shinhan Financial Group

Q Capital Partners

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Q Capital Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Q Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shinhan Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinhan Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Q Capital and Shinhan Financial

The main advantage of trading using opposite Q Capital and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Q Capital 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 Q Capital Partners 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.