Correlation Between Cheng Shin and Sheng Yu
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Sheng Yu 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 Cheng Shin and Sheng Yu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheng Shin Rubber and Sheng Yu Steel, you can compare the effects of market volatilities on Cheng Shin and Sheng Yu 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 Cheng Shin with a short position of Sheng Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Sheng Yu.
Diversification Opportunities for Cheng Shin and Sheng Yu
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cheng and Sheng is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Sheng Yu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sheng Yu Steel and Cheng Shin 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 Cheng Shin Rubber are associated (or correlated) with Sheng Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sheng Yu Steel has no effect on the direction of Cheng Shin i.e., Cheng Shin and Sheng Yu go up and down completely randomly.
Pair Corralation between Cheng Shin and Sheng Yu
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 1.61 times more return on investment than Sheng Yu. However, Cheng Shin is 1.61 times more volatile than Sheng Yu Steel. It trades about 0.04 of its potential returns per unit of risk. Sheng Yu Steel is currently generating about 0.03 per unit of risk. If you would invest 4,415 in Cheng Shin Rubber on August 26, 2024 and sell it today you would earn a total of 725.00 from holding Cheng Shin Rubber or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Sheng Yu Steel
Performance |
| Timeline |
| Cheng Shin Rubber |
| Sheng Yu Steel |
Cheng Shin and Sheng Yu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Sheng Yu
The main advantage of trading using opposite Cheng Shin and Sheng Yu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Sheng Yu 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 Sheng Yu will offset losses from the drop in Sheng Yu's long position.| Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Formosa Chemicals Fibre | Cheng Shin vs. Asia Cement Corp | Cheng Shin vs. Pou Chen Corp |
| Sheng Yu vs. Cheng Shin Rubber | Sheng Yu vs. Taiwan Cement Corp | Sheng Yu vs. China Steel Chemical | Sheng Yu vs. Yulon Motor Co |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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