Correlation Between Shan Loong and Yungshin Construction
Can any of the company-specific risk be diversified away by investing in both Shan Loong and Yungshin Construction 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 Yungshin Construction 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 Yungshin Construction Development, you can compare the effects of market volatilities on Shan Loong and Yungshin Construction 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 Yungshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shan Loong and Yungshin Construction.
Diversification Opportunities for Shan Loong and Yungshin Construction
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shan and Yungshin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Shan Loong Transportation Co and Yungshin Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yungshin Construction 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 Yungshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yungshin Construction has no effect on the direction of Shan Loong i.e., Shan Loong and Yungshin Construction go up and down completely randomly.
Pair Corralation between Shan Loong and Yungshin Construction
Assuming the 90 days trading horizon Shan Loong Transportation Co is expected to generate 0.38 times more return on investment than Yungshin Construction. However, Shan Loong Transportation Co is 2.65 times less risky than Yungshin Construction. It trades about -0.11 of its potential returns per unit of risk. Yungshin Construction Development is currently generating about -0.25 per unit of risk. If you would invest 2,160 in Shan Loong Transportation Co on August 31, 2024 and sell it today you would lose (160.00) from holding Shan Loong Transportation Co or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shan Loong Transportation Co vs. Yungshin Construction Developm
Performance |
| Timeline |
| Shan Loong Transport |
| Yungshin Construction |
Shan Loong and Yungshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shan Loong and Yungshin Construction
The main advantage of trading using opposite Shan Loong and Yungshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shan Loong position performs unexpectedly, Yungshin Construction 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 Yungshin Construction will offset losses from the drop in Yungshin Construction's long position.| Shan Loong vs. China Container Terminal | Shan Loong vs. Eastern Media International | Shan Loong vs. Taiwan Navigation Co | Shan Loong vs. Taiwan Cogeneration Corp |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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