Correlation Between Shinhan Financial and China Galaxy

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

Diversification Opportunities for Shinhan Financial and China Galaxy

0.0

Correlation Coefficient

Shinhan Financial  China Galaxy

Pay attention - limited upside

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

Pair Corralation between Shinhan Financial and China Galaxy

If you would invest  3,287  in Shinhan Financial Group on December 29, 2024 and sell it today you would lose (9.00) from holding Shinhan Financial Group or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Shinhan Financial Group  vs.  China Galaxy Securities

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.

China Galaxy Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Galaxy Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, China Galaxy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shinhan Financial and China Galaxy

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

The idea behind Shinhan Financial Group and China Galaxy Securities 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.

Check out your portfolio center.

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.