Correlation Between Shinhan Financial and Yangarra Resources

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

Diversification Opportunities for Shinhan Financial and Yangarra Resources

-0.45

Correlation Coefficient

Shinhan Financial  Yangarra Resources

Very good diversification

The 3 months correlation between Shinhan and Yangarra is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Yangarra Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yangarra Resources 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 Yangarra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yangarra Resources has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Yangarra Resources go up and down completely randomly.

Pair Corralation between Shinhan Financial and Yangarra Resources

Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.61 times more return on investment than Yangarra Resources. However, Shinhan Financial Group is 1.63 times less risky than Yangarra Resources. It trades about 0.03 of its potential returns per unit of risk. Yangarra Resources is currently generating about -0.05 per unit of risk. If you would invest  2,939  in Shinhan Financial Group on February 4, 2024 and sell it today you would earn a total of  511.00  from holding Shinhan Financial Group or generate 17.39% return on investment over 90 days.

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

Shinhan Financial Group  vs.  Yangarra Resources

Shinhan Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Shinhan Financial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Yangarra Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yangarra Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Yangarra Resources is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shinhan Financial and Yangarra Resources

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

The idea behind Shinhan Financial Group and Yangarra Resources 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.