Correlation Between Shinkong Textile and Advancetek Enterprise
Can any of the company-specific risk be diversified away by investing in both Shinkong Textile and Advancetek Enterprise 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 Textile and Advancetek Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinkong Textile Co and Advancetek Enterprise Co, you can compare the effects of market volatilities on Shinkong Textile and Advancetek Enterprise 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 Textile with a short position of Advancetek Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Textile and Advancetek Enterprise.
Diversification Opportunities for Shinkong Textile and Advancetek Enterprise
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shinkong and Advancetek is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Textile Co and Advancetek Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advancetek Enterprise and Shinkong Textile 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 Textile Co are associated (or correlated) with Advancetek Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advancetek Enterprise has no effect on the direction of Shinkong Textile i.e., Shinkong Textile and Advancetek Enterprise go up and down completely randomly.
Pair Corralation between Shinkong Textile and Advancetek Enterprise
Assuming the 90 days trading horizon Shinkong Textile Co is expected to under-perform the Advancetek Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Shinkong Textile Co is 2.24 times less risky than Advancetek Enterprise. The stock trades about -0.05 of its potential returns per unit of risk. The Advancetek Enterprise Co is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 6,660 in Advancetek Enterprise Co on September 12, 2024 and sell it today you would earn a total of 1,690 from holding Advancetek Enterprise Co or generate 25.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinkong Textile Co vs. Advancetek Enterprise Co
Performance |
| Timeline |
| Shinkong Textile |
| Advancetek Enterprise |
Shinkong Textile and Advancetek Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Textile and Advancetek Enterprise
The main advantage of trading using opposite Shinkong Textile and Advancetek Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Textile position performs unexpectedly, Advancetek Enterprise 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 Advancetek Enterprise will offset losses from the drop in Advancetek Enterprise's long position.| Shinkong Textile vs. Shinkong Synthetic Fiber | Shinkong Textile vs. Formosa Taffeta Co | Shinkong Textile vs. Far Eastern New | Shinkong Textile vs. Tainan Spinning Co |
| Advancetek Enterprise vs. HUA YU LIEN | Advancetek Enterprise vs. Shinkong Synthetic Fiber | Advancetek Enterprise vs. Lealea Enterprise Co | Advancetek Enterprise vs. Shinkong Textile 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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