Correlation Between Far Eastern and Shihlin Electric
Can any of the company-specific risk be diversified away by investing in both Far Eastern and Shihlin Electric 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 Far Eastern and Shihlin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far Eastern New and Shihlin Electric Engineering, you can compare the effects of market volatilities on Far Eastern and Shihlin Electric 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 Far Eastern with a short position of Shihlin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Shihlin Electric.
Diversification Opportunities for Far Eastern and Shihlin Electric
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Far and Shihlin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern New and Shihlin Electric Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shihlin Electric Eng and Far Eastern 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 Far Eastern New are associated (or correlated) with Shihlin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shihlin Electric Eng has no effect on the direction of Far Eastern i.e., Far Eastern and Shihlin Electric go up and down completely randomly.
Pair Corralation between Far Eastern and Shihlin Electric
Assuming the 90 days trading horizon Far Eastern is expected to generate 7.36 times less return on investment than Shihlin Electric. But when comparing it to its historical volatility, Far Eastern New is 2.38 times less risky than Shihlin Electric. It trades about 0.01 of its potential returns per unit of risk. Shihlin Electric Engineering is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 14,850 in Shihlin Electric Engineering on September 2, 2024 and sell it today you would earn a total of 5,000 from holding Shihlin Electric Engineering or generate 33.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern New vs. Shihlin Electric Engineering
Performance |
| Timeline |
| Far Eastern New |
| Shihlin Electric Eng |
Far Eastern and Shihlin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Shihlin Electric
The main advantage of trading using opposite Far Eastern and Shihlin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern position performs unexpectedly, Shihlin Electric 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 Shihlin Electric will offset losses from the drop in Shihlin Electric's long position.| Far Eastern vs. Nan Ya Plastics | Far Eastern vs. Taiwan Cement Corp | Far Eastern vs. Formosa Plastics Corp | Far Eastern vs. Asia Cement Corp |
| Shihlin Electric vs. TECO Electric Machinery | Shihlin Electric vs. Walsin Lihwa Corp | Shihlin Electric vs. Formosa Taffeta Co | Shihlin Electric vs. Far Eastern New |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |