Correlation Between Shinhan Financial and Tecsys

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

Diversification Opportunities for Shinhan Financial and Tecsys

-0.89

Correlation Coefficient

Shinhan Financial  Tecsys

Pay attention - limited upside

The 3 months correlation between Shinhan and Tecsys is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Tecsys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecsys Inc 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 Tecsys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecsys Inc has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Tecsys go up and down completely randomly.

Pair Corralation between Shinhan Financial and Tecsys

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Tecsys. But the stock apears to be less risky and, when comparing its historical volatility, Shinhan Financial Group is 1.79 times less risky than Tecsys. The stock trades about -0.3 of its potential returns per unit of risk. The Tecsys Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,169  in Tecsys Inc on October 6, 2024 and sell it today you would lose (72.00) from holding Tecsys Inc or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Shinhan Financial Group  vs.  Tecsys Inc

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 weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Tecsys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tecsys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tecsys may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shinhan Financial and Tecsys

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

The idea behind Shinhan Financial Group and Tecsys Inc 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.