Correlation Between Shinkong Insurance and China Development
Can any of the company-specific risk be diversified away by investing in both Shinkong Insurance and China Development 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 China Development 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 China Development Financial, you can compare the effects of market volatilities on Shinkong Insurance and China Development 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 China Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Insurance and China Development.
Diversification Opportunities for Shinkong Insurance and China Development
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinkong and China is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and China Development Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Development 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 China Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Development has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and China Development go up and down completely randomly.
Pair Corralation between Shinkong Insurance and China Development
Assuming the 90 days trading horizon Shinkong Insurance Co is expected to generate 1.0 times more return on investment than China Development. However, Shinkong Insurance is 1.0 times more volatile than China Development Financial. It trades about 0.07 of its potential returns per unit of risk. China Development Financial is currently generating about 0.04 per unit of risk. If you would invest 9,940 in Shinkong Insurance Co on October 26, 2024 and sell it today you would earn a total of 460.00 from holding Shinkong Insurance Co or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinkong Insurance Co vs. China Development Financial
Performance |
| Timeline |
| Shinkong Insurance |
| China Development |
Shinkong Insurance and China Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Insurance and China Development
The main advantage of trading using opposite Shinkong Insurance and China Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Insurance position performs unexpectedly, China Development 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 China Development will offset losses from the drop in China Development'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 |
| China Development vs. Cathay Financial Holding | China Development vs. Mega Financial Holding | China Development vs. CTBC Financial Holding | China Development vs. Fubon Financial Holding |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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