Correlation Between Shinkong Insurance and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Shinkong Insurance and Lien Chang 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 Lien Chang 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 Lien Chang Electronic, you can compare the effects of market volatilities on Shinkong Insurance and Lien Chang 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 Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Insurance and Lien Chang.
Diversification Opportunities for Shinkong Insurance and Lien Chang
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinkong and Lien is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Lien Chang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Chang Electronic 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 Lien Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Chang Electronic has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Lien Chang go up and down completely randomly.
Pair Corralation between Shinkong Insurance and Lien Chang
Assuming the 90 days trading horizon Shinkong Insurance Co is expected to generate 0.63 times more return on investment than Lien Chang. However, Shinkong Insurance Co is 1.58 times less risky than Lien Chang. It trades about 0.11 of its potential returns per unit of risk. Lien Chang Electronic is currently generating about 0.05 per unit of risk. If you would invest 4,795 in Shinkong Insurance Co on September 5, 2024 and sell it today you would earn a total of 5,205 from holding Shinkong Insurance Co or generate 108.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Shinkong Insurance Co vs. Lien Chang Electronic
Performance |
| Timeline |
| Shinkong Insurance |
| Lien Chang Electronic |
Shinkong Insurance and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Insurance and Lien Chang
The main advantage of trading using opposite Shinkong Insurance and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Insurance position performs unexpectedly, Lien Chang 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 Lien Chang will offset losses from the drop in Lien Chang'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 |
| Lien Chang vs. Taiwan Semiconductor Manufacturing | Lien Chang vs. Yang Ming Marine | Lien Chang vs. AU Optronics | Lien Chang vs. Nan Ya Plastics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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