Correlation Between Yeong Guan and Shin Zu
Can any of the company-specific risk be diversified away by investing in both Yeong Guan and Shin Zu 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 Yeong Guan and Shin Zu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yeong Guan Energy and Shin Zu Shing, you can compare the effects of market volatilities on Yeong Guan and Shin Zu 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 Yeong Guan with a short position of Shin Zu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yeong Guan and Shin Zu.
Diversification Opportunities for Yeong Guan and Shin Zu
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yeong and Shin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Yeong Guan Energy and Shin Zu Shing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Zu Shing and Yeong Guan 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 Yeong Guan Energy are associated (or correlated) with Shin Zu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Zu Shing has no effect on the direction of Yeong Guan i.e., Yeong Guan and Shin Zu go up and down completely randomly.
Pair Corralation between Yeong Guan and Shin Zu
Assuming the 90 days trading horizon Yeong Guan Energy is expected to under-perform the Shin Zu. But the stock apears to be less risky and, when comparing its historical volatility, Yeong Guan Energy is 1.53 times less risky than Shin Zu. The stock trades about -0.05 of its potential returns per unit of risk. The Shin Zu Shing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,238 in Shin Zu Shing on August 27, 2024 and sell it today you would earn a total of 11,262 from holding Shin Zu Shing or generate 136.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Yeong Guan Energy vs. Shin Zu Shing
Performance |
| Timeline |
| Yeong Guan Energy |
| Shin Zu Shing |
Yeong Guan and Shin Zu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yeong Guan and Shin Zu
The main advantage of trading using opposite Yeong Guan and Shin Zu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yeong Guan position performs unexpectedly, Shin Zu 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 Shin Zu will offset losses from the drop in Shin Zu's long position.| Yeong Guan vs. TECO Electric Machinery | Yeong Guan vs. Swancor Holding Co | Yeong Guan vs. Airtac International Group | Yeong Guan vs. Grape King Bio |
| Shin Zu vs. Sunny Friend Environmental | Shin Zu vs. TTET Union Corp | Shin Zu vs. ECOVE Environment Corp | Shin Zu vs. Yulon Finance Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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