Correlation Between Shihlin Electric and Allis Electric
Can any of the company-specific risk be diversified away by investing in both Shihlin Electric and Allis Electric 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 Allis Electric 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 Allis Electric Co, you can compare the effects of market volatilities on Shihlin Electric and Allis Electric 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 Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shihlin Electric and Allis Electric.
Diversification Opportunities for Shihlin Electric and Allis Electric
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shihlin and Allis is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Shihlin Electric Engineering and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis 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 Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of Shihlin Electric i.e., Shihlin Electric and Allis Electric go up and down completely randomly.
Pair Corralation between Shihlin Electric and Allis Electric
Assuming the 90 days trading horizon Shihlin Electric Engineering is expected to under-perform the Allis Electric. But the stock apears to be less risky and, when comparing its historical volatility, Shihlin Electric Engineering is 1.3 times less risky than Allis Electric. The stock trades about -0.09 of its potential returns per unit of risk. The Allis Electric Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 11,200 in Allis Electric Co on September 3, 2024 and sell it today you would lose (300.00) from holding Allis Electric Co or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shihlin Electric Engineering vs. Allis Electric Co
Performance |
| Timeline |
| Shihlin Electric Eng |
| Allis Electric |
Shihlin Electric and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shihlin Electric and Allis Electric
The main advantage of trading using opposite Shihlin Electric and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shihlin Electric position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| Shihlin Electric vs. Universal Microelectronics Co | Shihlin Electric vs. AVerMedia Technologies | Shihlin Electric vs. Symtek Automation Asia | Shihlin Electric vs. WiseChip Semiconductor |
| Allis Electric vs. Chung Hsin Electric Machinery | Allis Electric vs. Fortune Electric Co | Allis Electric vs. TECO Electric Machinery | Allis Electric vs. Shihlin Electric Engineering |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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