Correlation Between Lealea Enterprise and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise 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 Lealea Enterprise and Shinkong Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lealea Enterprise Co and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Lealea Enterprise 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 Lealea Enterprise with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Shinkong Synthetic.
Diversification Opportunities for Lealea Enterprise and Shinkong Synthetic
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lealea and Shinkong is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise 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 Lealea Enterprise 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 Lealea Enterprise 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 Lealea Enterprise i.e., Lealea Enterprise and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Lealea Enterprise and Shinkong Synthetic
Assuming the 90 days trading horizon Lealea Enterprise is expected to generate 1.73 times less return on investment than Shinkong Synthetic. But when comparing it to its historical volatility, Lealea Enterprise Co is 1.15 times less risky than Shinkong Synthetic. It trades about 0.09 of its potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,555 in Shinkong Synthetic Fiber on August 29, 2024 and sell it today you would earn a total of 45.00 from holding Shinkong Synthetic Fiber or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lealea Enterprise Co vs. Shinkong Synthetic Fiber
Performance |
| Timeline |
| Lealea Enterprise |
| Shinkong Synthetic Fiber |
Lealea Enterprise and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lealea Enterprise and Shinkong Synthetic
The main advantage of trading using opposite Lealea Enterprise and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lealea Enterprise 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.| Lealea Enterprise vs. Taiwan Semiconductor Manufacturing | Lealea Enterprise vs. Hon Hai Precision | Lealea Enterprise vs. MediaTek | Lealea Enterprise vs. Chunghwa Telecom Co |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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