Correlation Between Shinhan Financial and Endurance Gold

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

Diversification Opportunities for Shinhan Financial and Endurance Gold

-0.38

Correlation Coefficient

Shinhan Financial  Endurance Gold

Very good diversification

The 3 months correlation between Shinhan and Endurance is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Endurance Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endurance Gold 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 Endurance Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endurance Gold has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Endurance Gold go up and down completely randomly.

Pair Corralation between Shinhan Financial and Endurance Gold

Considering the 90-day investment horizon Shinhan Financial is expected to generate 403.26 times less return on investment than Endurance Gold. But when comparing it to its historical volatility, Shinhan Financial Group is 1.78 times less risky than Endurance Gold. It trades about 0.0 of its potential returns per unit of risk. Endurance Gold is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Endurance Gold on February 17, 2024 and sell it today you would earn a total of  4.00  from holding Endurance Gold or generate 44.44% return on investment over 90 days.

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

Shinhan Financial Group  vs.  Endurance Gold

Shinhan Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinhan Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Shinhan Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Endurance Gold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endurance Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Endurance Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinhan Financial and Endurance Gold

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

The idea behind Shinhan Financial Group and Endurance Gold 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.