Correlation Between Bank of Kaohsiung and Shinkong Insurance
Can any of the company-specific risk be diversified away by investing in both Bank of Kaohsiung and Shinkong Insurance 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 Bank of Kaohsiung and Shinkong Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Kaohsiung and Shinkong Insurance Co, you can compare the effects of market volatilities on Bank of Kaohsiung and Shinkong Insurance 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 Bank of Kaohsiung with a short position of Shinkong Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Kaohsiung and Shinkong Insurance.
Diversification Opportunities for Bank of Kaohsiung and Shinkong Insurance
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Shinkong is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Kaohsiung and Shinkong Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Insurance and Bank of Kaohsiung 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 Bank of Kaohsiung are associated (or correlated) with Shinkong Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Insurance has no effect on the direction of Bank of Kaohsiung i.e., Bank of Kaohsiung and Shinkong Insurance go up and down completely randomly.
Pair Corralation between Bank of Kaohsiung and Shinkong Insurance
Assuming the 90 days trading horizon Bank of Kaohsiung is expected to under-perform the Shinkong Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Kaohsiung is 1.81 times less risky than Shinkong Insurance. The stock trades about -0.02 of its potential returns per unit of risk. The Shinkong Insurance Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,160 in Shinkong Insurance Co on September 2, 2024 and sell it today you would earn a total of 4,840 from holding Shinkong Insurance Co or generate 93.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Kaohsiung vs. Shinkong Insurance Co
Performance |
| Timeline |
| Bank of Kaohsiung |
| Shinkong Insurance |
Bank of Kaohsiung and Shinkong Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Kaohsiung and Shinkong Insurance
The main advantage of trading using opposite Bank of Kaohsiung and Shinkong Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Kaohsiung position performs unexpectedly, Shinkong Insurance 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 Shinkong Insurance will offset losses from the drop in Shinkong Insurance's long position.| Bank of Kaohsiung vs. Central Reinsurance Corp | Bank of Kaohsiung vs. Huaku Development Co | Bank of Kaohsiung vs. Fubon Financial Holding |
| Shinkong Insurance vs. Central Reinsurance Corp | Shinkong Insurance vs. Huaku Development Co | Shinkong Insurance vs. Fubon Financial Holding | Shinkong Insurance vs. Chailease Holding 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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