Correlation Between Shinhan Financial and Medical Facilities

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

Diversification Opportunities for Shinhan Financial and Medical Facilities

-0.5

Correlation Coefficient

Shinhan Financial  Medical Facilities

Very good diversification

The 3 months correlation between Shinhan and Medical is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Medical Facilities go up and down completely randomly.

Pair Corralation between Shinhan Financial and Medical Facilities

Considering the 90-day investment horizon Shinhan Financial is expected to generate 6.02 times less return on investment than Medical Facilities. But when comparing it to its historical volatility, Shinhan Financial Group is 1.2 times less risky than Medical Facilities. It trades about 0.01 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  605.00  in Medical Facilities on October 5, 2024 and sell it today you would earn a total of  471.00  from holding Medical Facilities or generate 77.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.51%
Values	Daily Returns

Shinhan Financial Group  vs.  Medical Facilities

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

Medical Facilities

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Medical Facilities may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shinhan Financial and Medical Facilities

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

The idea behind Shinhan Financial Group and Medical Facilities 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.