Correlation Between Shinkong Insurance and Zeng Hsing
Can any of the company-specific risk be diversified away by investing in both Shinkong Insurance and Zeng Hsing 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 Shinkong Insurance and Zeng Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinkong Insurance Co and Zeng Hsing Industrial, you can compare the effects of market volatilities on Shinkong Insurance and Zeng Hsing 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 Shinkong Insurance with a short position of Zeng Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Insurance and Zeng Hsing.
Diversification Opportunities for Shinkong Insurance and Zeng Hsing
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinkong and Zeng is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Zeng Hsing Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeng Hsing Industrial and Shinkong Insurance 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 Shinkong Insurance Co are associated (or correlated) with Zeng Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeng Hsing Industrial has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Zeng Hsing go up and down completely randomly.
Pair Corralation between Shinkong Insurance and Zeng Hsing
Assuming the 90 days trading horizon Shinkong Insurance Co is expected to generate 1.32 times more return on investment than Zeng Hsing. However, Shinkong Insurance is 1.32 times more volatile than Zeng Hsing Industrial. It trades about 0.1 of its potential returns per unit of risk. Zeng Hsing Industrial is currently generating about -0.02 per unit of risk. If you would invest 5,120 in Shinkong Insurance Co on November 28, 2024 and sell it today you would earn a total of 4,880 from holding Shinkong Insurance Co or generate 95.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinkong Insurance Co vs. Zeng Hsing Industrial
Performance |
| Timeline |
| Shinkong Insurance |
| Zeng Hsing Industrial |
Shinkong Insurance and Zeng Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Insurance and Zeng Hsing
The main advantage of trading using opposite Shinkong Insurance and Zeng Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Insurance position performs unexpectedly, Zeng Hsing 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 Zeng Hsing will offset losses from the drop in Zeng Hsing's long position.| Shinkong Insurance vs. Central Reinsurance Corp | Shinkong Insurance vs. Huaku Development Co | Shinkong Insurance vs. Fubon Financial Holding | Shinkong Insurance vs. Chailease Holding Co |
| Zeng Hsing vs. TTET Union Corp | Zeng Hsing vs. Shinkong Insurance Co | Zeng Hsing vs. Huaku Development Co | Zeng Hsing vs. China Steel Chemical |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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