Correlation Between Shinhan Financial and Green Star

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

Diversification Opportunities for Shinhan Financial and Green Star

-0.51

Correlation Coefficient

Shinhan Financial  Green Star

Excellent diversification

The 3 months correlation between Shinhan and Green is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Green Star Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Star Products 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 Green Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Star Products has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Green Star go up and down completely randomly.

Pair Corralation between Shinhan Financial and Green Star

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Green Star. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 5.99 times less risky than Green Star. The stock trades about -0.05 of its potential returns per unit of risk. The Green Star Products is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Green Star Products on September 3, 2024 and sell it today you would earn a total of  0.02  from holding Green Star Products or generate 22.22% return on investment over 90 days.

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

Shinhan Financial Group  vs.  Green Star Products

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 latest unfluctuating performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Green Star Products

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Green Star Products are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Green Star demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Green Star

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

The idea behind Shinhan Financial Group and Green Star Products 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.