Correlation Between Take-Two Interactive and SHINHAN FINL

Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive and SHINHAN FINL 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 Take-Two Interactive and SHINHAN FINL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Take Two Interactive Software and SHINHAN FINL ADR1, you can compare the effects of market volatilities on Take-Two Interactive and SHINHAN FINL 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 Take-Two Interactive with a short position of SHINHAN FINL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and SHINHAN FINL.

Diversification Opportunities for Take-Two Interactive and SHINHAN FINL

-0.57

Correlation Coefficient

Take-Two Interactive  SHINHAN FINL

Excellent diversification

The 3 months correlation between Take-Two and SHINHAN is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and SHINHAN FINL ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHINHAN FINL ADR1 and Take-Two Interactive 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 Take Two Interactive Software are associated (or correlated) with SHINHAN FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHINHAN FINL ADR1 has no effect on the direction of Take-Two Interactive i.e., Take-Two Interactive and SHINHAN FINL go up and down completely randomly.

Pair Corralation between Take-Two Interactive and SHINHAN FINL

Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.59 times more return on investment than SHINHAN FINL. However, Take Two Interactive Software is 1.69 times less risky than SHINHAN FINL. It trades about 0.31 of its potential returns per unit of risk. SHINHAN FINL ADR1 is currently generating about -0.09 per unit of risk. If you would invest  13,500  in Take Two Interactive Software on October 4, 2024 and sell it today you would earn a total of  4,222  from holding Take Two Interactive Software or generate 31.27% return on investment over 90 days.

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

Take Two Interactive Software  vs.  SHINHAN FINL ADR1

Take Two Interactive

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Take-Two Interactive reported solid returns over the last few months and may actually be approaching a breakup point.

SHINHAN FINL ADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHINHAN FINL ADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Take-Two Interactive and SHINHAN FINL

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

The idea behind Take Two Interactive Software and SHINHAN FINL ADR1 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.