Correlation Between Sheng Yu and Deltamac Taiwan
Can any of the company-specific risk be diversified away by investing in both Sheng Yu and Deltamac Taiwan 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 Sheng Yu and Deltamac Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sheng Yu Steel and Deltamac Taiwan Co, you can compare the effects of market volatilities on Sheng Yu and Deltamac Taiwan 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 Sheng Yu with a short position of Deltamac Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sheng Yu and Deltamac Taiwan.
Diversification Opportunities for Sheng Yu and Deltamac Taiwan
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sheng and Deltamac is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sheng Yu Steel and Deltamac Taiwan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deltamac Taiwan and Sheng Yu 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 Sheng Yu Steel are associated (or correlated) with Deltamac Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deltamac Taiwan has no effect on the direction of Sheng Yu i.e., Sheng Yu and Deltamac Taiwan go up and down completely randomly.
Pair Corralation between Sheng Yu and Deltamac Taiwan
Assuming the 90 days trading horizon Sheng Yu Steel is expected to under-perform the Deltamac Taiwan. But the stock apears to be less risky and, when comparing its historical volatility, Sheng Yu Steel is 4.96 times less risky than Deltamac Taiwan. The stock trades about -0.08 of its potential returns per unit of risk. The Deltamac Taiwan Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,305 in Deltamac Taiwan Co on September 12, 2024 and sell it today you would earn a total of 2,645 from holding Deltamac Taiwan Co or generate 202.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sheng Yu Steel vs. Deltamac Taiwan Co
Performance |
| Timeline |
| Sheng Yu Steel |
| Deltamac Taiwan |
Sheng Yu and Deltamac Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sheng Yu and Deltamac Taiwan
The main advantage of trading using opposite Sheng Yu and Deltamac Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sheng Yu position performs unexpectedly, Deltamac Taiwan 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 Deltamac Taiwan will offset losses from the drop in Deltamac Taiwan's long position.| Sheng Yu vs. Tainan Spinning Co | Sheng Yu vs. Lealea Enterprise Co | Sheng Yu vs. China Petrochemical Development | Sheng Yu vs. Ruentex Development Co |
| Deltamac Taiwan vs. Sheng Yu Steel | Deltamac Taiwan vs. Newretail Co | Deltamac Taiwan vs. Chun Yuan Steel | Deltamac Taiwan vs. Sunny Friend Environmental |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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