Correlation Between Shiny Chemical and Song Ho
Can any of the company-specific risk be diversified away by investing in both Shiny Chemical and Song Ho 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 Song Ho 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 Song Ho Industrial, you can compare the effects of market volatilities on Shiny Chemical and Song Ho 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 Song Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and Song Ho.
Diversification Opportunities for Shiny Chemical and Song Ho
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shiny and Song is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and Song Ho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Ho Industrial 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 Song Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Ho Industrial has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and Song Ho go up and down completely randomly.
Pair Corralation between Shiny Chemical and Song Ho
Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to generate 2.39 times more return on investment than Song Ho. However, Shiny Chemical is 2.39 times more volatile than Song Ho Industrial. It trades about 0.05 of its potential returns per unit of risk. Song Ho Industrial is currently generating about 0.0 per unit of risk. If you would invest 11,650 in Shiny Chemical Industrial on August 30, 2024 and sell it today you would earn a total of 4,750 from holding Shiny Chemical Industrial or generate 40.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shiny Chemical Industrial vs. Song Ho Industrial
Performance |
| Timeline |
| Shiny Chemical Industrial |
| Song Ho Industrial |
Shiny Chemical and Song Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiny Chemical and Song Ho
The main advantage of trading using opposite Shiny Chemical and Song Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiny Chemical position performs unexpectedly, Song Ho 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 Song Ho will offset losses from the drop in Song Ho'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 |
| Song Ho vs. China Steel Corp | Song Ho vs. Chung Hung Steel | Song Ho vs. Tung Ho Steel | Song Ho vs. Feng Hsin Steel |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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