Correlation Between SHINHAN FINL and Amadeus IT

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

By analyzing existing cross correlation between SHINHAN FINL ADR1 and Amadeus IT Group, you can compare the effects of market volatilities on SHINHAN FINL and Amadeus IT 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 FINL with a short position of Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHINHAN FINL and Amadeus IT.

Diversification Opportunities for SHINHAN FINL and Amadeus IT

-0.5

Correlation Coefficient

SHINHAN FINL  Amadeus IT

Very good diversification

The 3 months correlation between SHINHAN and Amadeus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SHINHAN FINL ADR1 and Amadeus IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Group and SHINHAN FINL 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 FINL ADR1 are associated (or correlated) with Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Group has no effect on the direction of SHINHAN FINL i.e., SHINHAN FINL and Amadeus IT go up and down completely randomly.

Pair Corralation between SHINHAN FINL and Amadeus IT

Assuming the 90 days trading horizon SHINHAN FINL is expected to generate 1.24 times less return on investment than Amadeus IT. In addition to that, SHINHAN FINL is 1.63 times more volatile than Amadeus IT Group. It trades about 0.02 of its total potential returns per unit of risk. Amadeus IT Group is currently generating about 0.04 per unit of volatility. If you would invest  5,540  in Amadeus IT Group on October 5, 2024 and sell it today you would earn a total of  1,266  from holding Amadeus IT Group or generate 22.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

SHINHAN FINL ADR1  vs.  Amadeus IT Group

SHINHAN FINL ADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHINHAN FINL ADR1 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 and fundamental 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.

Amadeus IT Group

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Amadeus IT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Amadeus IT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SHINHAN FINL and Amadeus IT

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

The idea behind SHINHAN FINL ADR1 and Amadeus IT 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.