Correlation Between Shihlin Electric and Goodway Machine
Can any of the company-specific risk be diversified away by investing in both Shihlin Electric and Goodway Machine 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 Goodway Machine 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 Goodway Machine Corp, you can compare the effects of market volatilities on Shihlin Electric and Goodway Machine 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 Goodway Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shihlin Electric and Goodway Machine.
Diversification Opportunities for Shihlin Electric and Goodway Machine
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shihlin and Goodway is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shihlin Electric Engineering and Goodway Machine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodway Machine Corp 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 Goodway Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodway Machine Corp has no effect on the direction of Shihlin Electric i.e., Shihlin Electric and Goodway Machine go up and down completely randomly.
Pair Corralation between Shihlin Electric and Goodway Machine
Assuming the 90 days trading horizon Shihlin Electric Engineering is expected to generate 3.03 times more return on investment than Goodway Machine. However, Shihlin Electric is 3.03 times more volatile than Goodway Machine Corp. It trades about 0.06 of its potential returns per unit of risk. Goodway Machine Corp is currently generating about -0.03 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shihlin Electric Engineering vs. Goodway Machine Corp
Performance |
| Timeline |
| Shihlin Electric Eng |
| Goodway Machine Corp |
Shihlin Electric and Goodway Machine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shihlin Electric and Goodway Machine
The main advantage of trading using opposite Shihlin Electric and Goodway Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shihlin Electric position performs unexpectedly, Goodway Machine 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 Goodway Machine will offset losses from the drop in Goodway Machine'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 |
| Goodway Machine vs. Easywell Biomedicals | Goodway Machine vs. Louisa Professional Coffee | Goodway Machine vs. Great China Metal | Goodway Machine vs. Chailease Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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