Correlation Between President Securities and Shin Kong

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Can any of the company-specific risk be diversified away by investing in both President Securities and Shin Kong 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 President Securities and Shin Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between President Securities Corp and Shin Kong Financial, you can compare the effects of market volatilities on President Securities and Shin Kong 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 President Securities with a short position of Shin Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Securities and Shin Kong.

Diversification Opportunities for President Securities and Shin Kong

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between President and Shin is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding President Securities Corp and Shin Kong Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Kong Financial and President Securities 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 President Securities Corp are associated (or correlated) with Shin Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Kong Financial has no effect on the direction of President Securities i.e., President Securities and Shin Kong go up and down completely randomly.

Pair Corralation between President Securities and Shin Kong

Assuming the 90 days trading horizon President Securities Corp is expected to generate 0.93 times more return on investment than Shin Kong. However, President Securities Corp is 1.08 times less risky than Shin Kong. It trades about 0.09 of its potential returns per unit of risk. Shin Kong Financial is currently generating about 0.07 per unit of risk. If you would invest  1,900  in President Securities Corp on August 26, 2024 and sell it today you would earn a total of  780.00  from holding President Securities Corp or generate 41.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

President Securities Corp  vs.  Shin Kong Financial

 Performance 
       Timeline  
President Securities Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days President Securities Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, President Securities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Shin Kong Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shin Kong Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

President Securities and Shin Kong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with President Securities and Shin Kong

The main advantage of trading using opposite President Securities and Shin Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Securities position performs unexpectedly, Shin Kong 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 Shin Kong will offset losses from the drop in Shin Kong's long position.
The idea behind President Securities Corp and Shin Kong Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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