Correlation Between Amarantus Bioscience and Shinhan Financial

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

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

Diversification Opportunities for Amarantus Bioscience and Shinhan Financial

0.41

Correlation Coefficient

Amarantus Bioscience  Shinhan Financial

Very weak diversification

The 3 months correlation between Amarantus and Shinhan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Amarantus Bioscience Holdings and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Amarantus Bioscience 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 Amarantus Bioscience Holdings are associated (or correlated) with Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of Amarantus Bioscience i.e., Amarantus Bioscience and Shinhan Financial go up and down completely randomly.

Pair Corralation between Amarantus Bioscience and Shinhan Financial

Given the investment horizon of 90 days Amarantus Bioscience Holdings is expected to generate 34.13 times more return on investment than Shinhan Financial. However, Amarantus Bioscience is 34.13 times more volatile than Shinhan Financial Group. It trades about 0.08 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.02 per unit of risk. If you would invest  0.17  in Amarantus Bioscience Holdings on October 21, 2024 and sell it today you would lose (0.16) from holding Amarantus Bioscience Holdings or give up 94.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Amarantus Bioscience Holdings  vs.  Shinhan Financial Group

Amarantus Bioscience

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amarantus Bioscience Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, Amarantus Bioscience unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 unfluctuating performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Amarantus Bioscience and Shinhan Financial

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

The idea behind Amarantus Bioscience Holdings and Shinhan 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.