Correlation Between Tainan Spinning and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Shinkong Synthetic 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 Tainan Spinning and Shinkong Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainan Spinning Co and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Tainan Spinning and Shinkong Synthetic 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 Tainan Spinning with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Shinkong Synthetic.
Diversification Opportunities for Tainan Spinning and Shinkong Synthetic
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tainan and Shinkong is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and Tainan Spinning 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 Tainan Spinning Co are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Tainan Spinning and Shinkong Synthetic
Assuming the 90 days trading horizon Tainan Spinning Co is expected to under-perform the Shinkong Synthetic. But the stock apears to be less risky and, when comparing its historical volatility, Tainan Spinning Co is 1.14 times less risky than Shinkong Synthetic. The stock trades about -0.03 of its potential returns per unit of risk. The Shinkong Synthetic Fiber is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,555 in Shinkong Synthetic Fiber on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Shinkong Synthetic Fiber or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. Shinkong Synthetic Fiber
Performance |
| Timeline |
| Tainan Spinning |
| Shinkong Synthetic Fiber |
Tainan Spinning and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Shinkong Synthetic
The main advantage of trading using opposite Tainan Spinning and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Shinkong Synthetic 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 Shinkong Synthetic will offset losses from the drop in Shinkong Synthetic's long position.| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
| Shinkong Synthetic vs. Cheng Shin Rubber | Shinkong Synthetic vs. China Steel Chemical | Shinkong Synthetic vs. Yulon Motor 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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