Correlation Between Shinhan Financial and Amicogen

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

Diversification Opportunities for Shinhan Financial and Amicogen

-0.27

Correlation Coefficient

Shinhan Financial  Amicogen

Very good diversification

The 3 months correlation between Shinhan and Amicogen is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Amicogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amicogen 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 Amicogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amicogen has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Amicogen go up and down completely randomly.

Pair Corralation between Shinhan Financial and Amicogen

Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the Amicogen. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 2.65 times less risky than Amicogen. The stock trades about -0.12 of its potential returns per unit of risk. The Amicogen is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  387,500  in Amicogen on November 28, 2024 and sell it today you would earn a total of  21,000  from holding Amicogen or generate 5.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Shinhan Financial Group  vs.  Amicogen

Shinhan Financial

Risk-Adjusted Performance

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 basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Amicogen

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amicogen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amicogen may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Shinhan Financial and Amicogen

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

The idea behind Shinhan Financial Group and Amicogen 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.