Correlation Between Shinhan Financial and Amarantus Bioscience

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

Diversification Opportunities for Shinhan Financial and Amarantus Bioscience

0.31

Correlation Coefficient

Shinhan Financial  Amarantus Bioscience

Weak diversification

The 3 months correlation between Shinhan and Amarantus is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Amarantus Bioscience Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarantus Bioscience 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 Amarantus Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarantus Bioscience has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Amarantus Bioscience go up and down completely randomly.

Pair Corralation between Shinhan Financial and Amarantus Bioscience

Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.08 times more return on investment than Amarantus Bioscience. However, Shinhan Financial Group is 12.61 times less risky than Amarantus Bioscience. It trades about -0.37 of its potential returns per unit of risk. Amarantus Bioscience Holdings is currently generating about -0.21 per unit of risk. If you would invest  3,803  in Shinhan Financial Group on October 5, 2024 and sell it today you would lose (475.00) from holding Shinhan Financial Group or give up 12.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Shinhan Financial Group  vs.  Amarantus Bioscience Holdings

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.

Amarantus Bioscience

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amarantus Bioscience Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, Amarantus Bioscience unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Amarantus Bioscience

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

The idea behind Shinhan Financial Group and Amarantus Bioscience 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.