Correlation Between Shin Tai and Chi Sheng
Can any of the company-specific risk be diversified away by investing in both Shin Tai and Chi Sheng 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 Chi Sheng 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 Chi Sheng Chemical, you can compare the effects of market volatilities on Shin Tai and Chi Sheng 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 Chi Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Chi Sheng.
Diversification Opportunities for Shin Tai and Chi Sheng
Pay attention - limited upside
The 3 months correlation between Shin and Chi is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical 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 Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of Shin Tai i.e., Shin Tai and Chi Sheng go up and down completely randomly.
Pair Corralation between Shin Tai and Chi Sheng
Assuming the 90 days trading horizon Shin Tai Industry is expected to generate 1.28 times more return on investment than Chi Sheng. However, Shin Tai is 1.28 times more volatile than Chi Sheng Chemical. It trades about 0.02 of its potential returns per unit of risk. Chi Sheng Chemical is currently generating about 0.01 per unit of risk. If you would invest 6,960 in Shin Tai Industry on October 21, 2024 and sell it today you would earn a total of 740.00 from holding Shin Tai Industry or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Tai Industry vs. Chi Sheng Chemical
Performance |
| Timeline |
| Shin Tai Industry |
| Chi Sheng Chemical |
Shin Tai and Chi Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Tai and Chi Sheng
The main advantage of trading using opposite Shin Tai and Chi Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Tai position performs unexpectedly, Chi Sheng 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 Chi Sheng will offset losses from the drop in Chi Sheng'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 |
| Chi Sheng vs. K Way Information | Chi Sheng vs. WIN Semiconductors | Chi Sheng vs. Jetway Information Co | Chi Sheng vs. Syntek Semiconductor Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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