Correlation Between Shin Tai and Loop Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Shin Tai and Loop Telecommunicatio 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 Loop Telecommunicatio 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 Loop Telecommunication International, you can compare the effects of market volatilities on Shin Tai and Loop Telecommunicatio 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 Loop Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Loop Telecommunicatio.
Diversification Opportunities for Shin Tai and Loop Telecommunicatio
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shin and Loop is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Loop Telecommunication Interna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Telecommunication 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 Loop Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Telecommunication has no effect on the direction of Shin Tai i.e., Shin Tai and Loop Telecommunicatio go up and down completely randomly.
Pair Corralation between Shin Tai and Loop Telecommunicatio
Assuming the 90 days trading horizon Shin Tai is expected to generate 1.69 times less return on investment than Loop Telecommunicatio. But when comparing it to its historical volatility, Shin Tai Industry is 2.19 times less risky than Loop Telecommunicatio. It trades about 0.1 of its potential returns per unit of risk. Loop Telecommunication International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,450 in Loop Telecommunication International on August 26, 2024 and sell it today you would earn a total of 4,930 from holding Loop Telecommunication International or generate 201.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Tai Industry vs. Loop Telecommunication Interna
Performance |
| Timeline |
| Shin Tai Industry |
| Loop Telecommunication |
Shin Tai and Loop Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Tai and Loop Telecommunicatio
The main advantage of trading using opposite Shin Tai and Loop Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Tai position performs unexpectedly, Loop Telecommunicatio 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 Loop Telecommunicatio will offset losses from the drop in Loop Telecommunicatio's long position.| Shin Tai vs. Lian Hwa Foods | Shin Tai vs. Uni President Enterprises Corp | Shin Tai vs. Taiwan Cement Corp | Shin Tai vs. Ruentex Development Co |
| Loop Telecommunicatio vs. Novatek Microelectronics Corp | Loop Telecommunicatio vs. Quanta Computer | Loop Telecommunicatio vs. United Microelectronics |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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