Correlation Between Shiny Chemical and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Shiny Chemical and Shinkong Synthetic 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 Shiny Chemical and Shinkong Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shiny Chemical Industrial and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Shiny Chemical and Shinkong Synthetic 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 Shiny Chemical with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and Shinkong Synthetic.
Diversification Opportunities for Shiny Chemical and Shinkong Synthetic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shiny and Shinkong is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and Shiny Chemical 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 Shiny Chemical Industrial are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Shiny Chemical and Shinkong Synthetic
Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to generate 1.5 times more return on investment than Shinkong Synthetic. However, Shiny Chemical is 1.5 times more volatile than Shinkong Synthetic Fiber. It trades about 0.03 of its potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about -0.02 per unit of risk. If you would invest 12,550 in Shiny Chemical Industrial on November 27, 2024 and sell it today you would earn a total of 2,900 from holding Shiny Chemical Industrial or generate 23.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shiny Chemical Industrial vs. Shinkong Synthetic Fiber
Performance |
| Timeline |
| Shiny Chemical Industrial |
| Shinkong Synthetic Fiber |
Shiny Chemical and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiny Chemical and Shinkong Synthetic
The main advantage of trading using opposite Shiny Chemical and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiny Chemical position performs unexpectedly, Shinkong Synthetic 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 Shinkong Synthetic will offset losses from the drop in Shinkong Synthetic's long position.| Shiny Chemical vs. Chung Hwa Chemical | Shiny Chemical vs. China Man Made Fiber | Shiny Chemical vs. Sesoda Corp | Shiny Chemical vs. Everlight Chemical Industrial |
| Shinkong Synthetic vs. Chung Hwa Chemical | Shinkong Synthetic vs. China Man Made Fiber | Shinkong Synthetic vs. Sesoda Corp | Shinkong Synthetic vs. Everlight Chemical Industrial |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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