Correlation Between CareMax and Shinhan Financial

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

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

Diversification Opportunities for CareMax and Shinhan Financial

0.83

Correlation Coefficient

CareMax  Shinhan Financial

Very poor diversification

The 3 months correlation between CareMax and Shinhan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and CareMax 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 CareMax 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 CareMax i.e., CareMax and Shinhan Financial go up and down completely randomly.

Pair Corralation between CareMax and Shinhan Financial

Given the investment horizon of 90 days CareMax is expected to under-perform the Shinhan Financial. In addition to that, CareMax is 9.04 times more volatile than Shinhan Financial Group. It trades about -0.04 of its total potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.05 per unit of volatility. If you would invest  2,384  in Shinhan Financial Group on October 5, 2024 and sell it today you would earn a total of  943.50  from holding Shinhan Financial Group or generate 39.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

CareMax  vs.  Shinhan Financial Group

CareMax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 weak 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 CareMax and Shinhan Financial

The main advantage of trading using opposite CareMax and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareMax 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 CareMax 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.