Correlation Between Shinhan Financial and Alkame Holdings

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

Diversification Opportunities for Shinhan Financial and Alkame Holdings

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Correlation Coefficient

Shinhan Financial  Alkame Holdings

Pay attention - limited upside

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

Pair Corralation between Shinhan Financial and Alkame Holdings

Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.18 times more return on investment than Alkame Holdings. However, Shinhan Financial Group is 5.43 times less risky than Alkame Holdings. It trades about -0.04 of its potential returns per unit of risk. Alkame Holdings is currently generating about -0.13 per unit of risk. If you would invest  4,197  in Shinhan Financial Group on September 4, 2024 and sell it today you would lose (311.00) from holding Shinhan Financial Group or give up 7.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Shinhan Financial Group  vs.  Alkame Holdings

Shinhan Financial

Risk-Adjusted Performance

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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 nearly stable technical indicators, Shinhan Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alkame Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkame Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Shinhan Financial and Alkame Holdings

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

The idea behind Shinhan Financial Group and Alkame 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.