Correlation Between Cheng Shin and Giant Manufacturing
Can any of the company-specific risk be diversified away by investing in both Cheng Shin and Giant Manufacturing 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 Giant Manufacturing 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 Giant Manufacturing Co, you can compare the effects of market volatilities on Cheng Shin and Giant Manufacturing 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 Giant Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Giant Manufacturing.
Diversification Opportunities for Cheng Shin and Giant Manufacturing
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cheng and Giant is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Giant Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giant Manufacturing 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 Giant Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giant Manufacturing has no effect on the direction of Cheng Shin i.e., Cheng Shin and Giant Manufacturing go up and down completely randomly.
Pair Corralation between Cheng Shin and Giant Manufacturing
Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 1.59 times more return on investment than Giant Manufacturing. However, Cheng Shin is 1.59 times more volatile than Giant Manufacturing Co. It trades about 0.17 of its potential returns per unit of risk. Giant Manufacturing Co is currently generating about -0.48 per unit of risk. If you would invest 4,620 in Cheng Shin Rubber on August 25, 2024 and sell it today you would earn a total of 520.00 from holding Cheng Shin Rubber or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheng Shin Rubber vs. Giant Manufacturing Co
Performance |
| Timeline |
| Cheng Shin Rubber |
| Giant Manufacturing |
Cheng Shin and Giant Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheng Shin and Giant Manufacturing
The main advantage of trading using opposite Cheng Shin and Giant Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, Giant Manufacturing 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 Giant Manufacturing will offset losses from the drop in Giant Manufacturing'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 |
| Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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