Correlation Between Insurance Australia and SHINHAN FINL

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

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

Diversification Opportunities for Insurance Australia and SHINHAN FINL

0.0

Correlation Coefficient

Insurance Australia  SHINHAN FINL

Pay attention - limited upside

The 3 months correlation between Insurance and SHINHAN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and SHINHAN FINL ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHINHAN FINL ADR1 and Insurance Australia 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 Insurance Australia Group are associated (or correlated) with SHINHAN FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHINHAN FINL ADR1 has no effect on the direction of Insurance Australia i.e., Insurance Australia and SHINHAN FINL go up and down completely randomly.

Pair Corralation between Insurance Australia and SHINHAN FINL

If you would invest  440.00  in Insurance Australia Group on October 1, 2024 and sell it today you would earn a total of  60.00  from holding Insurance Australia Group or generate 13.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Insurance Australia Group  vs.  SHINHAN FINL ADR1

Insurance Australia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Insurance Australia Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Insurance Australia reported solid returns over the last few months and may actually be approaching a breakup point.

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Insurance Australia and SHINHAN FINL

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

The idea behind Insurance Australia Group and SHINHAN FINL ADR1 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.