Correlation Between Shinhan Financial and CardioComm Solutions

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

Diversification Opportunities for Shinhan Financial and CardioComm Solutions

0.46

Correlation Coefficient

Shinhan Financial  CardioComm Solutions

Very weak diversification

The 3 months correlation between Shinhan and CardioComm is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and CardioComm Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CardioComm Solutions 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 CardioComm Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CardioComm Solutions has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and CardioComm Solutions go up and down completely randomly.

Pair Corralation between Shinhan Financial and CardioComm Solutions

Considering the 90-day investment horizon Shinhan Financial is expected to generate 26.07 times less return on investment than CardioComm Solutions. But when comparing it to its historical volatility, Shinhan Financial Group is 23.92 times less risky than CardioComm Solutions. It trades about 0.04 of its potential returns per unit of risk. CardioComm Solutions is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2.00  in CardioComm Solutions on December 4, 2024 and sell it today you would lose (0.92) from holding CardioComm Solutions or give up 46.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.0%
Values	Daily Returns

Shinhan Financial Group  vs.  CardioComm Solutions

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 weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CardioComm Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CardioComm Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, CardioComm Solutions reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and CardioComm Solutions

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

The idea behind Shinhan Financial Group and CardioComm Solutions 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.