Correlation Between Shinkong Insurance and Taiwan Steel
Can any of the company-specific risk be diversified away by investing in both Shinkong Insurance and Taiwan Steel 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 Taiwan Steel 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 Taiwan Steel Union, you can compare the effects of market volatilities on Shinkong Insurance and Taiwan Steel 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 Taiwan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Insurance and Taiwan Steel.
Diversification Opportunities for Shinkong Insurance and Taiwan Steel
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shinkong and Taiwan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Taiwan Steel Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Steel Union 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 Taiwan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Steel Union has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Taiwan Steel go up and down completely randomly.
Pair Corralation between Shinkong Insurance and Taiwan Steel
Assuming the 90 days trading horizon Shinkong Insurance Co is expected to generate 1.2 times more return on investment than Taiwan Steel. However, Shinkong Insurance is 1.2 times more volatile than Taiwan Steel Union. It trades about 0.12 of its potential returns per unit of risk. Taiwan Steel Union is currently generating about 0.06 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. Taiwan Steel Union
Performance |
| Timeline |
| Shinkong Insurance |
| Taiwan Steel Union |
Shinkong Insurance and Taiwan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinkong Insurance and Taiwan Steel
The main advantage of trading using opposite Shinkong Insurance and Taiwan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Insurance position performs unexpectedly, Taiwan Steel 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 Taiwan Steel will offset losses from the drop in Taiwan Steel'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 |
| Taiwan Steel vs. Cleanaway Co | Taiwan Steel vs. Taiwan Secom Co | Taiwan Steel vs. TTET Union Corp | Taiwan Steel vs. Tehmag Foods |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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