Correlation Between Shinhan Financial and Phibro Animal

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

Diversification Opportunities for Shinhan Financial and Phibro Animal

-0.08

Correlation Coefficient

Shinhan Financial  Phibro Animal

Good diversification

The 3 months correlation between Shinhan and Phibro is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health 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 Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Phibro Animal go up and down completely randomly.

Pair Corralation between Shinhan Financial and Phibro Animal

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Phibro Animal. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 2.38 times less risky than Phibro Animal. The stock trades about -0.03 of its potential returns per unit of risk. The Phibro Animal Health is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,087  in Phibro Animal Health on December 28, 2024 and sell it today you would earn a total of  59.00  from holding Phibro Animal Health or generate 2.83% return on investment over 90 days.

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

Shinhan Financial Group  vs.  Phibro Animal Health

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 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.

Phibro Animal Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Phibro Animal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Shinhan Financial and Phibro Animal

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

The idea behind Shinhan Financial Group and Phibro Animal Health 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.