35.78 +0.03 (+0.08%) Sell

SHG does a dead cat bounce, it's still too early to buy into it

14 min read

SHINHAN FINANCIAL GROUP CO LTD (Foreign) ranked among the best performers on Friday. It delivered +0.08% to close at 35.78. On a day when the overall market breadth was 35%, it closed higher than 67% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing SHG]

SHG is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for SHG's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -5.94%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to SHG.


SHG has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 7 Aug, 2017 to 23 Aug, 2018. Over the last 2 years 11 months and 10 days, SHG underperformed the SP500 index on 50% days. Which indicates that on days SHG underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months SHG delivered profits on 53% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.02%) was on Monday, 22 Oct, 2018. While it's worst loss in the same period (of -6.41%) was on Friday, 7 Dec, 2018. The longest stort-term trends during this period were 4 profitable and losing days. The bullish trend (which returned +1.9%) started on 13 Nov, 2018 and went on till 16 Nov, 2018 while the bearish trend (which returned -5.67%) started on 9 Oct, 2018 and went on till 12 Oct, 2018.

The last 12 months saw SHG's investors making profits in 5 months and incurring losses in 7 months. SHG was less consistent in delivering monthly returs than SP500 index. SHG was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -13.05% compared to -7.28% returned by SP500 index in Oct 2018. SHG had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both SHG and SP500 index significantly outperform during months when quarterly/annual results are announced.

Persist - don't take no for an answer. If you're happy to sit at your desk and not take any risk, you'll be sitting at your desk for the next 20 years.
-- David Rubenstein

SHG is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in SHG's volatility from 17 Sep, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that SHG has significant positive skewness in it's return distribution. This indicates that investors can expect SHG to recover from drawdowns quickly. Which makes SHG a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SHG has more chance of extreme outcomes than the SP500 index. Therefore, SHG must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than SHG.

Based on your interest in SHG you may find it interesting to know that ~BLACKGOLD has delivered similar performance as SHG and can be considered as an alternative investment candidate (to SHG).

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