Correlation Between Shinhan Inverse and KB Financial

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

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

Diversification Opportunities for Shinhan Inverse and KB Financial

-0.13

Correlation Coefficient

Shinhan Inverse  KB Financial

Good diversification

The 3 months correlation between Shinhan and 105560 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Inverse Copper and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Shinhan Inverse 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 Inverse Copper are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Shinhan Inverse i.e., Shinhan Inverse and KB Financial go up and down completely randomly.

Pair Corralation between Shinhan Inverse and KB Financial

Assuming the 90 days trading horizon Shinhan Inverse Copper is expected to generate 0.59 times more return on investment than KB Financial. However, Shinhan Inverse Copper is 1.69 times less risky than KB Financial. It trades about 0.26 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.07 per unit of risk. If you would invest  558,000  in Shinhan Inverse Copper on October 6, 2024 and sell it today you would earn a total of  25,500  from holding Shinhan Inverse Copper or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Shinhan Inverse Copper  vs.  KB Financial Group

Shinhan Inverse Copper

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Inverse Copper are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinhan Inverse sustained solid returns over the last few months and may actually be approaching a breakup point.

KB Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KB 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 Shinhan Inverse and KB Financial

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

The idea behind Shinhan Inverse Copper and KB 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.

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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.