Correlation Between Shinhan Financial and Pulmatrix

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

Diversification Opportunities for Shinhan Financial and Pulmatrix

-0.26

Correlation Coefficient

Shinhan Financial  Pulmatrix

Very good diversification

The 3 months correlation between Shinhan and Pulmatrix is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Pulmatrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmatrix 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 Pulmatrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmatrix has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Pulmatrix go up and down completely randomly.

Pair Corralation between Shinhan Financial and Pulmatrix

Considering the 90-day investment horizon Shinhan Financial is expected to generate 70.87 times less return on investment than Pulmatrix. But when comparing it to its historical volatility, Shinhan Financial Group is 5.06 times less risky than Pulmatrix. It trades about 0.0 of its potential returns per unit of risk. Pulmatrix is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  686.00  in Pulmatrix on December 29, 2024 and sell it today you would earn a total of  33.00  from holding Pulmatrix or generate 4.81% 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.  Pulmatrix

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.

Pulmatrix

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Pulmatrix

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

The idea behind Shinhan Financial Group and Pulmatrix 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.