Correlation Between Shinhan Financial and Wal Mart

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

Diversification Opportunities for Shinhan Financial and Wal Mart

0.59

Correlation Coefficient

Shinhan Financial  Wal Mart

Very weak diversification

The 3 months correlation between Shinhan and Wal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Wal Mart de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de 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 Wal Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Wal Mart go up and down completely randomly.

Pair Corralation between Shinhan Financial and Wal Mart

Considering the 90-day investment horizon Shinhan Financial Group is expected to under-perform the Wal Mart. In addition to that, Shinhan Financial is 1.27 times more volatile than Wal Mart de. It trades about -0.06 of its total potential returns per unit of risk. Wal Mart de is currently generating about -0.03 per unit of volatility. If you would invest  2,984  in Wal Mart de on September 12, 2024 and sell it today you would lose (149.00) from holding Wal Mart de or give up 4.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Shinhan Financial Group  vs.  Wal Mart de

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.

Wal Mart de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wal Mart de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wal Mart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shinhan Financial and Wal Mart

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

The idea behind Shinhan Financial Group and Wal Mart de 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 CEOs Directory module to screen CEOs from public companies around the world.