Correlation Between SHINHAN FINL and DBS Group

Can any of the company-specific risk be diversified away by investing in both SHINHAN FINL and DBS Group 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 DBS Group 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 DBS Group Holdings, you can compare the effects of market volatilities on SHINHAN FINL and DBS Group 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 DBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHINHAN FINL and DBS Group.

Diversification Opportunities for SHINHAN FINL and DBS Group

-0.63

Correlation Coefficient

SHINHAN FINL  DBS Group

Excellent diversification

The 3 months correlation between SHINHAN and DBS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SHINHAN FINL ADR1 and DBS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS Group Holdings 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 DBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS Group Holdings has no effect on the direction of SHINHAN FINL i.e., SHINHAN FINL and DBS Group go up and down completely randomly.

Pair Corralation between SHINHAN FINL and DBS Group

Assuming the 90 days trading horizon SHINHAN FINL ADR1 is expected to under-perform the DBS Group. In addition to that, SHINHAN FINL is 1.54 times more volatile than DBS Group Holdings. It trades about -0.11 of its total potential returns per unit of risk. DBS Group Holdings is currently generating about 0.19 per unit of volatility. If you would invest  2,700  in DBS Group Holdings on September 26, 2024 and sell it today you would earn a total of  392.00  from holding DBS Group Holdings or generate 14.52% return on investment over 90 days.

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

SHINHAN FINL ADR1  vs.  DBS Group Holdings

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 latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DBS Group Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DBS Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SHINHAN FINL and DBS Group

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

The idea behind SHINHAN FINL ADR1 and DBS Group Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.