Correlation Between Shihlin Electric and Chung Hsin
Can any of the company-specific risk be diversified away by investing in both Shihlin Electric and Chung Hsin 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 Shihlin Electric and Chung Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shihlin Electric Engineering and Chung Hsin Electric Machinery, you can compare the effects of market volatilities on Shihlin Electric and Chung Hsin 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 Shihlin Electric with a short position of Chung Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shihlin Electric and Chung Hsin.
Diversification Opportunities for Shihlin Electric and Chung Hsin
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shihlin and Chung is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shihlin Electric Engineering and Chung Hsin Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hsin Electric and Shihlin Electric 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 Shihlin Electric Engineering are associated (or correlated) with Chung Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hsin Electric has no effect on the direction of Shihlin Electric i.e., Shihlin Electric and Chung Hsin go up and down completely randomly.
Pair Corralation between Shihlin Electric and Chung Hsin
Assuming the 90 days trading horizon Shihlin Electric Engineering is expected to generate 1.23 times more return on investment than Chung Hsin. However, Shihlin Electric is 1.23 times more volatile than Chung Hsin Electric Machinery. It trades about 0.06 of its potential returns per unit of risk. Chung Hsin Electric Machinery is currently generating about 0.05 per unit of risk. If you would invest 13,250 in Shihlin Electric Engineering on September 2, 2024 and sell it today you would earn a total of 6,600 from holding Shihlin Electric Engineering or generate 49.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shihlin Electric Engineering vs. Chung Hsin Electric Machinery
Performance |
| Timeline |
| Shihlin Electric Eng |
| Chung Hsin Electric |
Shihlin Electric and Chung Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shihlin Electric and Chung Hsin
The main advantage of trading using opposite Shihlin Electric and Chung Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shihlin Electric position performs unexpectedly, Chung Hsin 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 Chung Hsin will offset losses from the drop in Chung Hsin's long position.| Shihlin Electric vs. TECO Electric Machinery | Shihlin Electric vs. Walsin Lihwa Corp | Shihlin Electric vs. Formosa Taffeta Co | Shihlin Electric vs. Far Eastern New |
| Chung Hsin vs. BES Engineering Co | Chung Hsin vs. Continental Holdings Corp | Chung Hsin vs. Kee Tai Properties | Chung Hsin vs. Hung Sheng Construction |
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 CEOs Directory module to screen CEOs from public companies around the world.
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