Correlation Between Sienna Senior and Shinhan Financial

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

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

Diversification Opportunities for Sienna Senior and Shinhan Financial

0.82

Correlation Coefficient

Sienna Senior  Shinhan Financial

Very poor diversification

The 3 months correlation between Sienna and Shinhan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial and Sienna Senior 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 Sienna Senior Living 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 Sienna Senior i.e., Sienna Senior and Shinhan Financial go up and down completely randomly.

Pair Corralation between Sienna Senior and Shinhan Financial

Assuming the 90 days horizon Sienna Senior Living is expected to generate 0.8 times more return on investment than Shinhan Financial. However, Sienna Senior Living is 1.25 times less risky than Shinhan Financial. It trades about 0.07 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.05 per unit of risk. If you would invest  857.00  in Sienna Senior Living on October 6, 2024 and sell it today you would earn a total of  226.00  from holding Sienna Senior Living or generate 26.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	83.06%
Values	Daily Returns

Sienna Senior Living  vs.  Shinhan Financial Group

Sienna Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sienna Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Sienna Senior and Shinhan Financial

The main advantage of trading using opposite Sienna Senior and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sienna Senior 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 Sienna Senior Living 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.