Correlation Between Shinhan Financial and Doosan Bobcat
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Doosan Bobcat 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 Doosan Bobcat 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 Doosan Bobcat, you can compare the effects of market volatilities on Shinhan Financial and Doosan Bobcat 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 Doosan Bobcat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Doosan Bobcat.
Diversification Opportunities for Shinhan Financial and Doosan Bobcat
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinhan and Doosan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Doosan Bobcat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Bobcat 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 Doosan Bobcat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Bobcat has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Doosan Bobcat go up and down completely randomly.
Pair Corralation between Shinhan Financial and Doosan Bobcat
Assuming the 90 days trading horizon Shinhan Financial is expected to generate 11.15 times less return on investment than Doosan Bobcat. But when comparing it to its historical volatility, Shinhan Financial Group is 1.98 times less risky than Doosan Bobcat. It trades about 0.02 of its potential returns per unit of risk. Doosan Bobcat is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,190,000 in Doosan Bobcat on December 30, 2024 and sell it today you would earn a total of 920,000 from holding Doosan Bobcat or generate 21.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Shinhan Financial Group vs. Doosan Bobcat
Performance |
Timeline |
Shinhan Financial |
Doosan Bobcat |
Shinhan Financial and Doosan Bobcat Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shinhan Financial and Doosan Bobcat
The main advantage of trading using opposite Shinhan Financial and Doosan Bobcat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Doosan Bobcat 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 Doosan Bobcat will offset losses from the drop in Doosan Bobcat's long position.Shinhan Financial vs. Kolon Plastics | Shinhan Financial vs. National Plastic Co | Shinhan Financial vs. INNOX Advanced Materials | Shinhan Financial vs. Ecoplastic |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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