Correlation Between Shinhan Financial and Ocular Therapeutix

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

Diversification Opportunities for Shinhan Financial and Ocular Therapeutix

0.56

Correlation Coefficient

Shinhan Financial  Ocular Therapeutix

Very weak diversification

The 3 months correlation between Shinhan and Ocular is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Ocular Therapeutix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocular Therapeutix 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 Ocular Therapeutix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocular Therapeutix has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Ocular Therapeutix go up and down completely randomly.

Pair Corralation between Shinhan Financial and Ocular Therapeutix

Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.6 times more return on investment than Ocular Therapeutix. However, Shinhan Financial Group is 1.66 times less risky than Ocular Therapeutix. It trades about -0.21 of its potential returns per unit of risk. Ocular Therapeutix is currently generating about -0.25 per unit of risk. If you would invest  4,026  in Shinhan Financial Group on November 27, 2024 and sell it today you would lose (736.00) from holding Shinhan Financial Group or give up 18.28% of portfolio value over 90 days.

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

Shinhan Financial Group  vs.  Ocular Therapeutix

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 March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ocular Therapeutix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocular Therapeutix 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 basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Shinhan Financial and Ocular Therapeutix

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

The idea behind Shinhan Financial Group and Ocular Therapeutix 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.