Correlation Between Orix Corp and Shinhan Financial

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

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

Diversification Opportunities for Orix Corp and Shinhan Financial

-0.06

Correlation Coefficient

Orix Corp  Shinhan Financial

Good diversification

The 3 months correlation between Orix and Shinhan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Orix Corp 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 Orix Corp Ads 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 Orix Corp i.e., Orix Corp and Shinhan Financial go up and down completely randomly.

Pair Corralation between Orix Corp and Shinhan Financial

Allowing for the 90-day total investment horizon Orix Corp is expected to generate 1.21 times less return on investment than Shinhan Financial. In addition to that, Orix Corp is 1.08 times more volatile than Shinhan Financial Group. It trades about 0.01 of its total potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.02 per unit of volatility. If you would invest  3,318  in Shinhan Financial Group on December 27, 2024 and sell it today you would earn a total of  28.00  from holding Shinhan Financial Group or generate 0.84% return on investment over 90 days.

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

Orix Corp Ads  vs.  Shinhan Financial Group

Orix Corp Ads

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orix Corp Ads are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shinhan Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Shinhan Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Orix Corp and Shinhan Financial

The main advantage of trading using opposite Orix Corp and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp 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 Orix Corp Ads 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.