Correlation Between SHINHAN FINL and Infosys

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

Diversification Opportunities for SHINHAN FINL and Infosys

-0.61

Correlation Coefficient

SHINHAN FINL  Infosys

Excellent diversification

The 3 months correlation between SHINHAN and Infosys is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SHINHAN FINL ADR1 and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of SHINHAN FINL i.e., SHINHAN FINL and Infosys go up and down completely randomly.

Pair Corralation between SHINHAN FINL and Infosys

Assuming the 90 days trading horizon SHINHAN FINL ADR1 is expected to under-perform the Infosys. But the stock apears to be less risky and, when comparing its historical volatility, SHINHAN FINL ADR1 is 1.24 times less risky than Infosys. The stock trades about -0.24 of its potential returns per unit of risk. The Infosys Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,090  in Infosys Limited on October 5, 2024 and sell it today you would earn a total of  90.00  from holding Infosys Limited or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

SHINHAN FINL ADR1  vs.  Infosys Limited

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.

Infosys Limited

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Infosys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Infosys may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SHINHAN FINL and Infosys

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

The idea behind SHINHAN FINL ADR1 and Infosys Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.