Correlation Between Shinkong Synthetic and Acelon Chemicals
Can any of the company-specific risk be diversified away by investing in both Shinkong Synthetic and Acelon Chemicals 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 Acelon Chemicals 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 Acelon Chemicals Fiber, you can compare the effects of market volatilities on Shinkong Synthetic and Acelon Chemicals 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 Acelon Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Synthetic and Acelon Chemicals.
Diversification Opportunities for Shinkong Synthetic and Acelon Chemicals
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinkong and Acelon is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Synthetic Fiber and Acelon Chemicals Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acelon Chemicals Fiber 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 Acelon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acelon Chemicals Fiber has no effect on the direction of Shinkong Synthetic i.e., Shinkong Synthetic and Acelon Chemicals go up and down completely randomly.
Pair Corralation between Shinkong Synthetic and Acelon Chemicals
Assuming the 90 days trading horizon Shinkong Synthetic Fiber is expected to under-perform the Acelon Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Shinkong Synthetic Fiber is 1.38 times less risky than Acelon Chemicals. The stock trades about -0.01 of its potential returns per unit of risk. The Acelon Chemicals Fiber is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,250 in Acelon Chemicals Fiber on September 3, 2024 and sell it today you would earn a total of 125.00 from holding Acelon Chemicals Fiber or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinkong Synthetic Fiber vs. Acelon Chemicals Fiber
Performance |
| Timeline |
| Shinkong Synthetic Fiber |
| Acelon Chemicals Fiber |
Shinkong Synthetic and Acelon Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Synthetic and Acelon Chemicals
The main advantage of trading using opposite Shinkong Synthetic and Acelon Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Synthetic position performs unexpectedly, Acelon Chemicals 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 Acelon Chemicals will offset losses from the drop in Acelon Chemicals' long position.The idea behind Shinkong Synthetic Fiber and Acelon Chemicals Fiber 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.| Acelon Chemicals vs. Tainan Spinning Co | Acelon Chemicals vs. Chia Her Industrial | Acelon Chemicals vs. WiseChip Semiconductor | Acelon Chemicals vs. Novatek Microelectronics Corp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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