Correlation Between Sunspring Metal and Shih Kuen
Can any of the company-specific risk be diversified away by investing in both Sunspring Metal and Shih Kuen 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 Sunspring Metal and Shih Kuen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunspring Metal Corp and Shih Kuen Plastics, you can compare the effects of market volatilities on Sunspring Metal and Shih Kuen 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 Sunspring Metal with a short position of Shih Kuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunspring Metal and Shih Kuen.
Diversification Opportunities for Sunspring Metal and Shih Kuen
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunspring and Shih is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sunspring Metal Corp and Shih Kuen Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Kuen Plastics and Sunspring Metal 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 Sunspring Metal Corp are associated (or correlated) with Shih Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Kuen Plastics has no effect on the direction of Sunspring Metal i.e., Sunspring Metal and Shih Kuen go up and down completely randomly.
Pair Corralation between Sunspring Metal and Shih Kuen
Assuming the 90 days trading horizon Sunspring Metal Corp is expected to generate 1.05 times more return on investment than Shih Kuen. However, Sunspring Metal is 1.05 times more volatile than Shih Kuen Plastics. It trades about 0.05 of its potential returns per unit of risk. Shih Kuen Plastics is currently generating about 0.05 per unit of risk. If you would invest 2,139 in Sunspring Metal Corp on August 30, 2024 and sell it today you would earn a total of 1,156 from holding Sunspring Metal Corp or generate 54.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Sunspring Metal Corp vs. Shih Kuen Plastics
Performance |
| Timeline |
| Sunspring Metal Corp |
| Shih Kuen Plastics |
Sunspring Metal and Shih Kuen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunspring Metal and Shih Kuen
The main advantage of trading using opposite Sunspring Metal and Shih Kuen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunspring Metal position performs unexpectedly, Shih Kuen 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 Shih Kuen will offset losses from the drop in Shih Kuen's long position.| Sunspring Metal vs. Yulon Motor Co | Sunspring Metal vs. Far Eastern Department | Sunspring Metal vs. China Steel Corp | Sunspring Metal vs. Chang Hwa Commercial |
| Shih Kuen vs. Chain Chon Industrial | Shih Kuen vs. Camellia Metal Co | Shih Kuen vs. Sunspring Metal Corp | Shih Kuen vs. Insyde Software |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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