Correlation Between Evergreen Steel and Shin Zu
Can any of the company-specific risk be diversified away by investing in both Evergreen Steel and Shin Zu 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 Evergreen Steel and Shin Zu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergreen Steel Corp and Shin Zu Shing, you can compare the effects of market volatilities on Evergreen Steel and Shin Zu 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 Evergreen Steel with a short position of Shin Zu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Steel and Shin Zu.
Diversification Opportunities for Evergreen Steel and Shin Zu
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Evergreen and Shin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Steel Corp and Shin Zu Shing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Zu Shing and Evergreen Steel 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 Evergreen Steel Corp are associated (or correlated) with Shin Zu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Zu Shing has no effect on the direction of Evergreen Steel i.e., Evergreen Steel and Shin Zu go up and down completely randomly.
Pair Corralation between Evergreen Steel and Shin Zu
Assuming the 90 days trading horizon Evergreen Steel is expected to generate 1.65 times less return on investment than Shin Zu. But when comparing it to its historical volatility, Evergreen Steel Corp is 1.5 times less risky than Shin Zu. It trades about 0.07 of its potential returns per unit of risk. Shin Zu Shing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,050 in Shin Zu Shing on August 27, 2024 and sell it today you would earn a total of 10,450 from holding Shin Zu Shing or generate 115.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Evergreen Steel Corp vs. Shin Zu Shing
Performance |
| Timeline |
| Evergreen Steel Corp |
| Shin Zu Shing |
Evergreen Steel and Shin Zu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Steel and Shin Zu
The main advantage of trading using opposite Evergreen Steel and Shin Zu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Steel position performs unexpectedly, Shin Zu 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 Shin Zu will offset losses from the drop in Shin Zu's long position.| Evergreen Steel vs. Yang Ming Marine | Evergreen Steel vs. Wan Hai Lines | Evergreen Steel vs. Hsin Kuang Steel | Evergreen Steel vs. Evergreen Marine Corp |
| Shin Zu vs. Sunny Friend Environmental | Shin Zu vs. TTET Union Corp | Shin Zu vs. ECOVE Environment Corp | Shin Zu vs. Yulon Finance 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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