Correlation Between Shinhan Financial and 79North

Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and 79North 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 79North 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 79North, you can compare the effects of market volatilities on Shinhan Financial and 79North 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 79North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and 79North.

Diversification Opportunities for Shinhan Financial and 79North

-0.73

Correlation Coefficient

Shinhan Financial  79North

Pay attention - limited upside

The 3 months correlation between Shinhan and 79North is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and 79North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 79North 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 79North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 79North has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and 79North go up and down completely randomly.

Pair Corralation between Shinhan Financial and 79North

Considering the 90-day investment horizon Shinhan Financial is expected to generate 21.82 times less return on investment than 79North. But when comparing it to its historical volatility, Shinhan Financial Group is 23.66 times less risky than 79North. It trades about 0.05 of its potential returns per unit of risk. 79North is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.94  in 79North on September 5, 2024 and sell it today you would earn a total of  1.92  from holding 79North or generate 204.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.54%
Values	Daily Returns

Shinhan Financial Group  vs.  79North

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 latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

79North

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days 79North has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, 79North reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and 79North

The main advantage of trading using opposite Shinhan Financial and 79North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, 79North 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 79North will offset losses from the drop in 79North's long position.

The idea behind Shinhan Financial Group and 79North 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.