Correlation Between Froch Enterprise and Sinkang Industries
Can any of the company-specific risk be diversified away by investing in both Froch Enterprise and Sinkang Industries 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 Froch Enterprise and Sinkang Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Froch Enterprise Co and Sinkang Industries Co, you can compare the effects of market volatilities on Froch Enterprise and Sinkang Industries 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 Froch Enterprise with a short position of Sinkang Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Froch Enterprise and Sinkang Industries.
Diversification Opportunities for Froch Enterprise and Sinkang Industries
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Froch and Sinkang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Froch Enterprise Co and Sinkang Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinkang Industries and Froch Enterprise 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 Froch Enterprise Co are associated (or correlated) with Sinkang Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinkang Industries has no effect on the direction of Froch Enterprise i.e., Froch Enterprise and Sinkang Industries go up and down completely randomly.
Pair Corralation between Froch Enterprise and Sinkang Industries
Assuming the 90 days trading horizon Froch Enterprise Co is expected to under-perform the Sinkang Industries. In addition to that, Froch Enterprise is 1.22 times more volatile than Sinkang Industries Co. It trades about -0.43 of its total potential returns per unit of risk. Sinkang Industries Co is currently generating about -0.21 per unit of volatility. If you would invest 1,520 in Sinkang Industries Co on September 13, 2024 and sell it today you would lose (70.00) from holding Sinkang Industries Co or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Froch Enterprise Co vs. Sinkang Industries Co
Performance |
| Timeline |
| Froch Enterprise |
| Sinkang Industries |
Froch Enterprise and Sinkang Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Froch Enterprise and Sinkang Industries
The main advantage of trading using opposite Froch Enterprise and Sinkang Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Froch Enterprise position performs unexpectedly, Sinkang Industries 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 Sinkang Industries will offset losses from the drop in Sinkang Industries' long position.| Froch Enterprise vs. Ta Chen Stainless | Froch Enterprise vs. Chung Hung Steel | Froch Enterprise vs. YC Inox Co | Froch Enterprise vs. Sheng Yu Steel |
| Sinkang Industries vs. YC Inox Co | Sinkang Industries vs. Ta Chen Stainless | Sinkang Industries vs. Froch Enterprise Co | Sinkang Industries vs. Chung Hung 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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