Correlation Between Zeng Hsing and Sampo Corp

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Can any of the company-specific risk be diversified away by investing in both Zeng Hsing and Sampo Corp 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 Zeng Hsing and Sampo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zeng Hsing Industrial and Sampo Corp, you can compare the effects of market volatilities on Zeng Hsing and Sampo Corp 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 Zeng Hsing with a short position of Sampo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zeng Hsing and Sampo Corp.

Diversification Opportunities for Zeng Hsing and Sampo Corp

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Zeng and Sampo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Zeng Hsing Industrial and Sampo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Corp and Zeng Hsing 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 Zeng Hsing Industrial are associated (or correlated) with Sampo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Corp has no effect on the direction of Zeng Hsing i.e., Zeng Hsing and Sampo Corp go up and down completely randomly.

Pair Corralation between Zeng Hsing and Sampo Corp

Assuming the 90 days trading horizon Zeng Hsing Industrial is expected to generate 2.08 times more return on investment than Sampo Corp. However, Zeng Hsing is 2.08 times more volatile than Sampo Corp. It trades about 0.06 of its potential returns per unit of risk. Sampo Corp is currently generating about -0.01 per unit of risk. If you would invest  9,674  in Zeng Hsing Industrial on October 25, 2024 and sell it today you would earn a total of  926.00  from holding Zeng Hsing Industrial or generate 9.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.21%
ValuesDaily Returns

Zeng Hsing Industrial  vs.  Sampo Corp

 Performance 
       Timeline  
Zeng Hsing Industrial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Zeng Hsing Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Zeng Hsing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Sampo Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sampo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sampo Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Zeng Hsing and Sampo Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zeng Hsing and Sampo Corp

The main advantage of trading using opposite Zeng Hsing and Sampo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zeng Hsing position performs unexpectedly, Sampo Corp 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 Sampo Corp will offset losses from the drop in Sampo Corp's long position.
The idea behind Zeng Hsing Industrial and Sampo Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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