Correlation Between Shinhan Financial and Aeglea Bio

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

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

Diversification Opportunities for Shinhan Financial and Aeglea Bio

-0.74

Correlation Coefficient

Shinhan Financial  Aeglea Bio

Pay attention - limited upside

The 3 months correlation between Shinhan and Aeglea is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Aeglea Bio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeglea Bio Therapeutics and Shinhan Financial 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 Financial Group are associated (or correlated) with Aeglea Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeglea Bio Therapeutics has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Aeglea Bio go up and down completely randomly.

Pair Corralation between Shinhan Financial and Aeglea Bio

Considering the 90-day investment horizon Shinhan Financial is expected to generate 53.02 times less return on investment than Aeglea Bio. But when comparing it to its historical volatility, Shinhan Financial Group is 15.2 times less risky than Aeglea Bio. It trades about 0.02 of its potential returns per unit of risk. Aeglea Bio Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Aeglea Bio Therapeutics on October 21, 2024 and sell it today you would earn a total of  11.00  from holding Aeglea Bio Therapeutics or generate 22.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.4%
Values	Daily Returns

Shinhan Financial Group  vs.  Aeglea Bio Therapeutics

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.

Aeglea Bio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeglea Bio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Aeglea Bio is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Shinhan Financial and Aeglea Bio

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

The idea behind Shinhan Financial Group and Aeglea Bio Therapeutics 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.