Correlation Between Shinhan Financial and Nu-Med Plus

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

Diversification Opportunities for Shinhan Financial and Nu-Med Plus

0.76

Correlation Coefficient

Shinhan Financial  Nu-Med Plus

Poor diversification

The 3 months correlation between Shinhan and Nu-Med is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Nu Med Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Med Plus 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 Nu-Med Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Med Plus has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Nu-Med Plus go up and down completely randomly.

Pair Corralation between Shinhan Financial and Nu-Med Plus

Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.19 times more return on investment than Nu-Med Plus. However, Shinhan Financial Group is 5.3 times less risky than Nu-Med Plus. It trades about -0.02 of its potential returns per unit of risk. Nu Med Plus is currently generating about -0.07 per unit of risk. If you would invest  3,820  in Shinhan Financial Group on October 22, 2024 and sell it today you would lose (366.00) from holding Shinhan Financial Group or give up 9.58% of portfolio value over 90 days.

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

Shinhan Financial Group  vs.  Nu Med Plus

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.

Nu Med Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Med Plus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Shinhan Financial and Nu-Med Plus

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

The idea behind Shinhan Financial Group and Nu Med Plus 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.