Correlation Between Shan Loong and Kerry TJ
Can any of the company-specific risk be diversified away by investing in both Shan Loong and Kerry TJ 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 Shan Loong and Kerry TJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shan Loong Transportation Co and Kerry TJ Logistics, you can compare the effects of market volatilities on Shan Loong and Kerry TJ 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 Shan Loong with a short position of Kerry TJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shan Loong and Kerry TJ.
Diversification Opportunities for Shan Loong and Kerry TJ
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shan and Kerry is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shan Loong Transportation Co and Kerry TJ Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry TJ Logistics and Shan Loong 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 Shan Loong Transportation Co are associated (or correlated) with Kerry TJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry TJ Logistics has no effect on the direction of Shan Loong i.e., Shan Loong and Kerry TJ go up and down completely randomly.
Pair Corralation between Shan Loong and Kerry TJ
Assuming the 90 days trading horizon Shan Loong Transportation Co is expected to under-perform the Kerry TJ. In addition to that, Shan Loong is 2.78 times more volatile than Kerry TJ Logistics. It trades about -0.23 of its total potential returns per unit of risk. Kerry TJ Logistics is currently generating about -0.16 per unit of volatility. If you would invest 4,020 in Kerry TJ Logistics on October 26, 2024 and sell it today you would lose (140.00) from holding Kerry TJ Logistics or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shan Loong Transportation Co vs. Kerry TJ Logistics
Performance |
| Timeline |
| Shan Loong Transport |
| Kerry TJ Logistics |
Shan Loong and Kerry TJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shan Loong and Kerry TJ
The main advantage of trading using opposite Shan Loong and Kerry TJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shan Loong position performs unexpectedly, Kerry TJ 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 Kerry TJ will offset losses from the drop in Kerry TJ's long position.| Shan Loong vs. Kerry TJ Logistics | Shan Loong vs. China Container Terminal | Shan Loong vs. Eastern Media International | Shan Loong vs. Taiwan Navigation Co |
| Kerry TJ vs. U Ming Marine Transport | Kerry TJ vs. Evergreen International Storage | Kerry TJ vs. Yang Ming Marine | Kerry TJ vs. President Chain Store |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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