Correlation Between Shin Tai and Asustek Computer
Can any of the company-specific risk be diversified away by investing in both Shin Tai and Asustek Computer 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 Asustek Computer 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 Asustek Computer, you can compare the effects of market volatilities on Shin Tai and Asustek Computer 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 Asustek Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Asustek Computer.
Diversification Opportunities for Shin Tai and Asustek Computer
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin and Asustek is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Asustek Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asustek Computer 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 Asustek Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asustek Computer has no effect on the direction of Shin Tai i.e., Shin Tai and Asustek Computer go up and down completely randomly.
Pair Corralation between Shin Tai and Asustek Computer
Assuming the 90 days trading horizon Shin Tai is expected to generate 1.21 times less return on investment than Asustek Computer. But when comparing it to its historical volatility, Shin Tai Industry is 1.29 times less risky than Asustek Computer. It trades about 0.1 of its potential returns per unit of risk. Asustek Computer is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 29,650 in Asustek Computer on August 28, 2024 and sell it today you would earn a total of 30,550 from holding Asustek Computer or generate 103.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Tai Industry vs. Asustek Computer
Performance |
| Timeline |
| Shin Tai Industry |
| Asustek Computer |
Shin Tai and Asustek Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Tai and Asustek Computer
The main advantage of trading using opposite Shin Tai and Asustek Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Tai position performs unexpectedly, Asustek Computer 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 Asustek Computer will offset losses from the drop in Asustek Computer's long position.| Shin Tai vs. Fwusow Industry Co | Shin Tai vs. TTET Union Corp | Shin Tai vs. Lian Hwa Foods | Shin Tai vs. Formosa Oilseed Processing |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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