Correlation Between Standard Foods and Yong Shun
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Yong Shun 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 Standard Foods and Yong Shun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Yong Shun Chemical, you can compare the effects of market volatilities on Standard Foods and Yong Shun 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 Standard Foods with a short position of Yong Shun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Yong Shun.
Diversification Opportunities for Standard Foods and Yong Shun
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Standard and Yong is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Yong Shun Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Shun Chemical and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Yong Shun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Shun Chemical has no effect on the direction of Standard Foods i.e., Standard Foods and Yong Shun go up and down completely randomly.
Pair Corralation between Standard Foods and Yong Shun
Assuming the 90 days trading horizon Standard Foods Corp is expected to generate 0.62 times more return on investment than Yong Shun. However, Standard Foods Corp is 1.61 times less risky than Yong Shun. It trades about 0.17 of its potential returns per unit of risk. Yong Shun Chemical is currently generating about -0.04 per unit of risk. If you would invest 3,725 in Standard Foods Corp on September 14, 2024 and sell it today you would earn a total of 60.00 from holding Standard Foods Corp or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Yong Shun Chemical
Performance |
| Timeline |
| Standard Foods Corp |
| Yong Shun Chemical |
Standard Foods and Yong Shun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Yong Shun
The main advantage of trading using opposite Standard Foods and Yong Shun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Yong Shun 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 Yong Shun will offset losses from the drop in Yong Shun's long position.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. Great Wall Enterprise | Standard Foods vs. Ruentex Development Co | Standard Foods vs. WiseChip Semiconductor |
| Yong Shun vs. Standard Foods Corp | Yong Shun vs. TWOWAY Communications | Yong Shun vs. Yuanta Financial Holdings | Yong Shun vs. Chunghwa Telecom Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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