Correlation Between Shinkong Synthetic and GTM Holdings
Can any of the company-specific risk be diversified away by investing in both Shinkong Synthetic and GTM Holdings 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 Shinkong Synthetic and GTM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinkong Synthetic Fiber and GTM Holdings Corp, you can compare the effects of market volatilities on Shinkong Synthetic and GTM Holdings 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 Shinkong Synthetic with a short position of GTM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Synthetic and GTM Holdings.
Diversification Opportunities for Shinkong Synthetic and GTM Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinkong and GTM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Synthetic Fiber and GTM Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTM Holdings Corp and Shinkong Synthetic 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 Shinkong Synthetic Fiber are associated (or correlated) with GTM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTM Holdings Corp has no effect on the direction of Shinkong Synthetic i.e., Shinkong Synthetic and GTM Holdings go up and down completely randomly.
Pair Corralation between Shinkong Synthetic and GTM Holdings
Assuming the 90 days trading horizon Shinkong Synthetic Fiber is expected to generate 1.72 times more return on investment than GTM Holdings. However, Shinkong Synthetic is 1.72 times more volatile than GTM Holdings Corp. It trades about 0.12 of its potential returns per unit of risk. GTM Holdings Corp is currently generating about 0.08 per unit of risk. If you would invest 1,555 in Shinkong Synthetic Fiber on September 5, 2024 and sell it today you would earn a total of 40.00 from holding Shinkong Synthetic Fiber or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinkong Synthetic Fiber vs. GTM Holdings Corp
Performance |
| Timeline |
| Shinkong Synthetic Fiber |
| GTM Holdings Corp |
Shinkong Synthetic and GTM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Synthetic and GTM Holdings
The main advantage of trading using opposite Shinkong Synthetic and GTM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Synthetic position performs unexpectedly, GTM Holdings 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 GTM Holdings will offset losses from the drop in GTM Holdings' long position.The idea behind Shinkong Synthetic Fiber and GTM Holdings 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.| GTM Holdings vs. Taiwan Semiconductor Manufacturing | GTM Holdings vs. Yang Ming Marine | GTM Holdings vs. AU Optronics | GTM Holdings vs. Nan Ya Plastics |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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