Correlation Between Shin Tai and Zenitron Corp

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Can any of the company-specific risk be diversified away by investing in both Shin Tai and Zenitron Corp 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 Zenitron Corp 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 Zenitron Corp, you can compare the effects of market volatilities on Shin Tai and Zenitron Corp 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 Zenitron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Zenitron Corp.

Diversification Opportunities for Shin Tai and Zenitron Corp

ShinZenitronDiversified AwayShinZenitronDiversified Away100%
0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shin and Zenitron is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Zenitron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenitron 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 Zenitron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenitron Corp has no effect on the direction of Shin Tai i.e., Shin Tai and Zenitron Corp go up and down completely randomly.

Pair Corralation between Shin Tai and Zenitron Corp

Assuming the 90 days trading horizon Shin Tai Industry is expected to generate 3.66 times more return on investment than Zenitron Corp. However, Shin Tai is 3.66 times more volatile than Zenitron Corp. It trades about 0.14 of its potential returns per unit of risk. Zenitron Corp is currently generating about 0.39 per unit of risk. If you would invest  8,050  in Shin Tai Industry on November 30, 2024 and sell it today you would earn a total of  850.00  from holding Shin Tai Industry or generate 10.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.0%
ValuesDaily Returns

Shin Tai Industry  vs.  Zenitron Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50-40-30-20-100
JavaScript chart by amCharts 3.21.151235 3028
       Timeline  
Shin Tai Industry 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Shin Tai Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb708090100110120130140150
Zenitron Corp 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Zenitron Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Zenitron Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2930313233

Shin Tai and Zenitron Corp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.72-5.04-3.35-1.66-0.02371.382.84.235.657.07 0.10.20.30.4
JavaScript chart by amCharts 3.21.151235 3028
       Returns  

Pair Trading with Shin Tai and Zenitron Corp

The main advantage of trading using opposite Shin Tai and Zenitron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Tai position performs unexpectedly, Zenitron Corp 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 Zenitron Corp will offset losses from the drop in Zenitron Corp's long position.
The idea behind Shin Tai Industry and Zenitron 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.
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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