Correlation Between Shinhan Financial and Pureun Mutual

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

Diversification Opportunities for Shinhan Financial and Pureun Mutual

-0.39

Correlation Coefficient

Shinhan Financial  Pureun Mutual

Very good diversification

The 3 months correlation between Shinhan and Pureun is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Pureun Mutual Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pureun Mutual Savings 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 Pureun Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pureun Mutual Savings has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Pureun Mutual go up and down completely randomly.

Pair Corralation between Shinhan Financial and Pureun Mutual

Assuming the 90 days trading horizon Shinhan Financial Group is expected to under-perform the Pureun Mutual. In addition to that, Shinhan Financial is 1.05 times more volatile than Pureun Mutual Savings. It trades about -0.07 of its total potential returns per unit of risk. Pureun Mutual Savings is currently generating about 0.03 per unit of volatility. If you would invest  888,000  in Pureun Mutual Savings on September 28, 2024 and sell it today you would earn a total of  28,000  from holding Pureun Mutual Savings or generate 3.15% 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.  Pureun Mutual Savings

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.

Pureun Mutual Savings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pureun Mutual Savings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Pureun Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shinhan Financial and Pureun Mutual

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

The idea behind Shinhan Financial Group and Pureun Mutual Savings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.