Correlation Between Chia Her and Shinkong Textile
Can any of the company-specific risk be diversified away by investing in both Chia Her and Shinkong Textile 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 Chia Her and Shinkong Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia Her Industrial and Shinkong Textile Co, you can compare the effects of market volatilities on Chia Her and Shinkong Textile 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 Chia Her with a short position of Shinkong Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Her and Shinkong Textile.
Diversification Opportunities for Chia Her and Shinkong Textile
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chia and Shinkong is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chia Her Industrial and Shinkong Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Textile and Chia Her 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 Chia Her Industrial are associated (or correlated) with Shinkong Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Textile has no effect on the direction of Chia Her i.e., Chia Her and Shinkong Textile go up and down completely randomly.
Pair Corralation between Chia Her and Shinkong Textile
Assuming the 90 days trading horizon Chia Her Industrial is expected to generate 2.92 times more return on investment than Shinkong Textile. However, Chia Her is 2.92 times more volatile than Shinkong Textile Co. It trades about 0.07 of its potential returns per unit of risk. Shinkong Textile Co is currently generating about -0.03 per unit of risk. If you would invest 1,865 in Chia Her Industrial on September 2, 2024 and sell it today you would earn a total of 510.00 from holding Chia Her Industrial or generate 27.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chia Her Industrial vs. Shinkong Textile Co
Performance |
| Timeline |
| Chia Her Industrial |
| Shinkong Textile |
Chia Her and Shinkong Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia Her and Shinkong Textile
The main advantage of trading using opposite Chia Her and Shinkong Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Her position performs unexpectedly, Shinkong Textile 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 Textile will offset losses from the drop in Shinkong Textile's long position.| Chia Her vs. Chaintech Technology Corp | Chia Her vs. Avision | Chia Her vs. Clevo Co | Chia Her vs. Elitegroup Computer Systems |
| Shinkong Textile vs. Shinkong Synthetic Fiber | Shinkong Textile vs. Formosa Taffeta Co | Shinkong Textile vs. Far Eastern New | Shinkong Textile vs. Tainan Spinning 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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