Correlation Between Shinhan Financial and Bowmo

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

Diversification Opportunities for Shinhan Financial and Bowmo

0.31

Correlation Coefficient

Shinhan Financial  Bowmo

Weak diversification

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

Pair Corralation between Shinhan Financial and Bowmo

Considering the 90-day investment horizon Shinhan Financial is expected to generate 763.9 times less return on investment than Bowmo. But when comparing it to its historical volatility, Shinhan Financial Group is 24.85 times less risky than Bowmo. It trades about 0.0 of its potential returns per unit of risk. Bowmo Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.05  in Bowmo Inc on December 28, 2024 and sell it today you would lose (0.03) from holding Bowmo Inc or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Shinhan Financial Group  vs.  Bowmo Inc

Shinhan Financial

Risk-Adjusted Performance

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.

Bowmo Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bowmo Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Bowmo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Bowmo

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

The idea behind Shinhan Financial Group and Bowmo Inc 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.