Correlation Between Shin Tai and D Link
Can any of the company-specific risk be diversified away by investing in both Shin Tai and D Link 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 D Link 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 D Link Corp, you can compare the effects of market volatilities on Shin Tai and D Link 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 D Link. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and D Link.
Diversification Opportunities for Shin Tai and D Link
Pay attention - limited upside
The 3 months correlation between Shin and 2332 is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and D Link Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D Link Corp 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 D Link. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D Link Corp has no effect on the direction of Shin Tai i.e., Shin Tai and D Link go up and down completely randomly.
Pair Corralation between Shin Tai and D Link
Assuming the 90 days trading horizon Shin Tai Industry is expected to generate 1.02 times more return on investment than D Link. However, Shin Tai is 1.02 times more volatile than D Link Corp. It trades about 0.26 of its potential returns per unit of risk. D Link Corp is currently generating about -0.06 per unit of risk. If you would invest 7,300 in Shin Tai Industry on November 5, 2024 and sell it today you would earn a total of 690.00 from holding Shin Tai Industry or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Tai Industry vs. D Link Corp
Performance |
| Timeline |
| Shin Tai Industry |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| D Link Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Shin Tai and D Link Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Tai and D Link
The main advantage of trading using opposite Shin Tai and D Link positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Tai position performs unexpectedly, D Link 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 D Link will offset losses from the drop in D Link's long position.The idea behind Shin Tai Industry and D Link Corp 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.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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