Correlation Between DBS Group and SHINHAN FINL

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

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

Diversification Opportunities for DBS Group and SHINHAN FINL

0.75

Correlation Coefficient

DBS Group  SHINHAN FINL

Poor diversification

The 3 months correlation between DBS and SHINHAN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings 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 DBS Group 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 DBS Group Holdings 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 DBS Group i.e., DBS Group and SHINHAN FINL go up and down completely randomly.

Pair Corralation between DBS Group and SHINHAN FINL

Assuming the 90 days trading horizon DBS Group is expected to generate 2.66 times less return on investment than SHINHAN FINL. But when comparing it to its historical volatility, DBS Group Holdings is 1.96 times less risky than SHINHAN FINL. It trades about 0.18 of its potential returns per unit of risk. SHINHAN FINL ADR1 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,926  in SHINHAN FINL ADR1 on April 20, 2025 and sell it today you would earn a total of  1,294  from holding SHINHAN FINL ADR1 or generate 44.22% return on investment over 90 days.

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

DBS Group Holdings  vs.  SHINHAN FINL ADR1

DBS Group Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DBS Group reported solid returns over the last few months and may actually be approaching a breakup point.

SHINHAN FINL ADR1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SHINHAN FINL ADR1 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SHINHAN FINL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DBS Group and SHINHAN FINL

The main advantage of trading using opposite DBS Group and SHINHAN FINL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group 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 DBS Group Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..