Correlation Between Shinhan Financial and Labor Smart

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

Diversification Opportunities for Shinhan Financial and Labor Smart

0.85

Correlation Coefficient

Shinhan Financial  Labor Smart

Very poor diversification

The 3 months correlation between Shinhan and Labor is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Labor Smart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labor Smart 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 Labor Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labor Smart has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Labor Smart go up and down completely randomly.

Pair Corralation between Shinhan Financial and Labor Smart

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Labor Smart. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 5.44 times less risky than Labor Smart. The stock trades about -0.01 of its potential returns per unit of risk. The Labor Smart is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.14  in Labor Smart on December 27, 2024 and sell it today you would lose (0.01) from holding Labor Smart or give up 7.14% of portfolio value over 90 days.

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

Shinhan Financial Group  vs.  Labor Smart

Shinhan Financial

Risk-Adjusted Performance

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.

Labor Smart

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Labor Smart are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Labor Smart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shinhan Financial and Labor Smart

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

The idea behind Shinhan Financial Group and Labor Smart 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 CEOs Directory module to screen CEOs from public companies around the world.