Correlation Between Shinkong Insurance and Tang Eng
Can any of the company-specific risk be diversified away by investing in both Shinkong Insurance and Tang Eng 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 Tang Eng 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 Tang Eng Iron, you can compare the effects of market volatilities on Shinkong Insurance and Tang Eng 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 Tang Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Insurance and Tang Eng.
Diversification Opportunities for Shinkong Insurance and Tang Eng
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinkong and Tang is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron 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 Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Tang Eng go up and down completely randomly.
Pair Corralation between Shinkong Insurance and Tang Eng
Assuming the 90 days trading horizon Shinkong Insurance Co is expected to generate 1.72 times more return on investment than Tang Eng. However, Shinkong Insurance is 1.72 times more volatile than Tang Eng Iron. It trades about 0.12 of its potential returns per unit of risk. Tang Eng Iron is currently generating about 0.02 per unit of risk. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinkong Insurance Co vs. Tang Eng Iron
Performance |
| Timeline |
| Shinkong Insurance |
| Tang Eng Iron |
Shinkong Insurance and Tang Eng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Insurance and Tang Eng
The main advantage of trading using opposite Shinkong Insurance and Tang Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Insurance position performs unexpectedly, Tang Eng 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 Tang Eng will offset losses from the drop in Tang Eng'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 |
| Tang Eng vs. Basso Industry Corp | Tang Eng vs. Chung Hsin Electric Machinery | Tang Eng vs. TYC Brother Industrial | Tang Eng vs. TECO Electric Machinery |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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