Correlation Between Shinhan Financial and Scottish Mortgage

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

Diversification Opportunities for Shinhan Financial and Scottish Mortgage

0.28

Correlation Coefficient

Shinhan Financial  Scottish Mortgage

Modest diversification

The 3 months correlation between Shinhan and Scottish is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage 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 Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Shinhan Financial and Scottish Mortgage

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Scottish Mortgage. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 1.69 times less risky than Scottish Mortgage. The stock trades about -0.05 of its potential returns per unit of risk. The Scottish Mortgage Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,165  in Scottish Mortgage Investment on December 22, 2024 and sell it today you would earn a total of  57.00  from holding Scottish Mortgage Investment or generate 4.89% return on investment over 90 days.

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

Shinhan Financial Group  vs.  Scottish Mortgage Investment

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.

Scottish Mortgage

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scottish Mortgage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shinhan Financial and Scottish Mortgage

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

The idea behind Shinhan Financial Group and Scottish Mortgage Investment 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.