Correlation Between Shinhan Financial and Atinum Investment

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

Diversification Opportunities for Shinhan Financial and Atinum Investment

0.43

Correlation Coefficient

Shinhan Financial  Atinum Investment

Very weak diversification

The 3 months correlation between Shinhan and Atinum is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Atinum Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atinum Investment 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 Atinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atinum Investment has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Atinum Investment go up and down completely randomly.

Pair Corralation between Shinhan Financial and Atinum Investment

Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the Atinum Investment. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 1.3 times less risky than Atinum Investment. The stock trades about -0.05 of its potential returns per unit of risk. The Atinum Investment Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  230,000  in Atinum Investment Co on September 13, 2024 and sell it today you would earn a total of  21,000  from holding Atinum Investment Co or generate 9.13% return on investment over 90 days.

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

Shinhan Financial Group  vs.  Atinum Investment Co

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.

Atinum Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atinum Investment Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atinum Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Atinum Investment

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

The idea behind Shinhan Financial Group and Atinum Investment Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.