Correlation Between Shiny Chemical and San Fu
Can any of the company-specific risk be diversified away by investing in both Shiny Chemical and San Fu 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 San Fu 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 San Fu Chemical, you can compare the effects of market volatilities on Shiny Chemical and San Fu 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 San Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and San Fu.
Diversification Opportunities for Shiny Chemical and San Fu
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shiny and San is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and San Fu Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fu Chemical 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 San Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fu Chemical has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and San Fu go up and down completely randomly.
Pair Corralation between Shiny Chemical and San Fu
Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to generate 1.14 times more return on investment than San Fu. However, Shiny Chemical is 1.14 times more volatile than San Fu Chemical. It trades about -0.07 of its potential returns per unit of risk. San Fu Chemical is currently generating about -0.2 per unit of risk. If you would invest 15,950 in Shiny Chemical Industrial on October 23, 2024 and sell it today you would lose (450.00) from holding Shiny Chemical Industrial or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Shiny Chemical Industrial vs. San Fu Chemical
Performance |
| Timeline |
| Shiny Chemical Industrial |
| San Fu Chemical |
Shiny Chemical and San Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiny Chemical and San Fu
The main advantage of trading using opposite Shiny Chemical and San Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiny Chemical position performs unexpectedly, San Fu 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 San Fu will offset losses from the drop in San Fu's long position.| Shiny Chemical vs. China Steel Chemical | Shiny Chemical vs. TTET Union Corp | Shiny Chemical vs. Eternal Materials Co | Shiny Chemical vs. Yung Chi Paint |
| San Fu vs. Nuvoton Technology Corp | San Fu vs. Shiny Chemical Industrial | San Fu vs. Jinan Acetate Chemical | San Fu vs. Coremax 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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