Correlation Between Great Wall and Shin Tai
Can any of the company-specific risk be diversified away by investing in both Great Wall and Shin Tai 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 Great Wall and Shin Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Shin Tai Industry, you can compare the effects of market volatilities on Great Wall and Shin Tai 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 Great Wall with a short position of Shin Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Shin Tai.
Diversification Opportunities for Great Wall and Shin Tai
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Great and Shin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Shin Tai Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Tai Industry and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Shin Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Tai Industry has no effect on the direction of Great Wall i.e., Great Wall and Shin Tai go up and down completely randomly.
Pair Corralation between Great Wall and Shin Tai
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.31 times more return on investment than Shin Tai. However, Great Wall Enterprise is 3.22 times less risky than Shin Tai. It trades about -0.05 of its potential returns per unit of risk. Shin Tai Industry is currently generating about -0.05 per unit of risk. If you would invest 5,537 in Great Wall Enterprise on October 25, 2024 and sell it today you would lose (377.00) from holding Great Wall Enterprise or give up 6.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Shin Tai Industry
Performance |
| Timeline |
| Great Wall Enterprise |
| Shin Tai Industry |
Great Wall and Shin Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Shin Tai
The main advantage of trading using opposite Great Wall and Shin Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Shin Tai 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 Shin Tai will offset losses from the drop in Shin Tai's long position.| Great Wall vs. Charoen Pokphand Enterprise | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Lien Hwa Industrial | Great Wall vs. Standard Foods Corp |
| Shin Tai vs. Uni President Enterprises Corp | Shin Tai vs. Taisun Enterprise Co | Shin Tai vs. AGV Products Corp | Shin Tai vs. Great Wall Enterprise |
Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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