Correlation Between Shin Tai and Champion Building
Can any of the company-specific risk be diversified away by investing in both Shin Tai and Champion Building 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 Shin Tai and Champion Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Tai Industry and Champion Building Materials, you can compare the effects of market volatilities on Shin Tai and Champion Building 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 Shin Tai with a short position of Champion Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Champion Building.
Diversification Opportunities for Shin Tai and Champion Building
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shin and Champion is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Champion Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Building and Shin Tai 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 Shin Tai Industry are associated (or correlated) with Champion Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Building has no effect on the direction of Shin Tai i.e., Shin Tai and Champion Building go up and down completely randomly.
Pair Corralation between Shin Tai and Champion Building
Assuming the 90 days trading horizon Shin Tai Industry is expected to generate 0.75 times more return on investment than Champion Building. However, Shin Tai Industry is 1.33 times less risky than Champion Building. It trades about 0.1 of its potential returns per unit of risk. Champion Building Materials is currently generating about 0.02 per unit of risk. If you would invest 6,950 in Shin Tai Industry on August 30, 2024 and sell it today you would earn a total of 7,650 from holding Shin Tai Industry or generate 110.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Tai Industry vs. Champion Building Materials
Performance |
| Timeline |
| Shin Tai Industry |
| Champion Building |
Shin Tai and Champion Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Tai and Champion Building
The main advantage of trading using opposite Shin Tai and Champion Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Tai position performs unexpectedly, Champion Building 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 Champion Building will offset losses from the drop in Champion Building's long position.The idea behind Shin Tai Industry and Champion Building Materials 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.| Champion Building vs. Yulon Motor Co | Champion Building vs. Far Eastern Department | Champion Building vs. China Steel Corp | Champion Building vs. Chang Hwa Commercial |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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