Correlation Between Shinkong Synthetic and HOYA Resort
Can any of the company-specific risk be diversified away by investing in both Shinkong Synthetic and HOYA Resort 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 HOYA Resort 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 HOYA Resort Hotel, you can compare the effects of market volatilities on Shinkong Synthetic and HOYA Resort 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 HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Synthetic and HOYA Resort.
Diversification Opportunities for Shinkong Synthetic and HOYA Resort
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shinkong and HOYA is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Synthetic Fiber and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel 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 HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of Shinkong Synthetic i.e., Shinkong Synthetic and HOYA Resort go up and down completely randomly.
Pair Corralation between Shinkong Synthetic and HOYA Resort
Assuming the 90 days trading horizon Shinkong Synthetic Fiber is expected to under-perform the HOYA Resort. But the stock apears to be less risky and, when comparing its historical volatility, Shinkong Synthetic Fiber is 1.54 times less risky than HOYA Resort. The stock trades about -0.03 of its potential returns per unit of risk. The HOYA Resort Hotel is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,900 in HOYA Resort Hotel on September 5, 2024 and sell it today you would earn a total of 0.00 from holding HOYA Resort Hotel or generate 0.0% 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. HOYA Resort Hotel
Performance |
| Timeline |
| Shinkong Synthetic Fiber |
| HOYA Resort Hotel |
Shinkong Synthetic and HOYA Resort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Synthetic and HOYA Resort
The main advantage of trading using opposite Shinkong Synthetic and HOYA Resort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Synthetic position performs unexpectedly, HOYA Resort 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 HOYA Resort will offset losses from the drop in HOYA Resort's long position.The idea behind Shinkong Synthetic Fiber and HOYA Resort Hotel 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.| HOYA Resort vs. Chun Yuan Steel | HOYA Resort vs. Feng Hsin Steel | HOYA Resort vs. Shinkong Synthetic Fiber | HOYA Resort vs. Wei Chih Steel |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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