Correlation Between Hua Nan and Shinkong Insurance
Can any of the company-specific risk be diversified away by investing in both Hua Nan and Shinkong Insurance 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 Hua Nan and Shinkong Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Nan Financial and Shinkong Insurance Co, you can compare the effects of market volatilities on Hua Nan and Shinkong Insurance 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 Hua Nan with a short position of Shinkong Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Nan and Shinkong Insurance.
Diversification Opportunities for Hua Nan and Shinkong Insurance
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hua and Shinkong is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hua Nan Financial and Shinkong Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Insurance and Hua Nan 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 Hua Nan Financial are associated (or correlated) with Shinkong Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Insurance has no effect on the direction of Hua Nan i.e., Hua Nan and Shinkong Insurance go up and down completely randomly.
Pair Corralation between Hua Nan and Shinkong Insurance
Assuming the 90 days trading horizon Hua Nan is expected to generate 3.46 times less return on investment than Shinkong Insurance. But when comparing it to its historical volatility, Hua Nan Financial is 1.46 times less risky than Shinkong Insurance. It trades about 0.05 of its potential returns per unit of risk. Shinkong Insurance Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. 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 | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Hua Nan Financial vs. Shinkong Insurance Co
Performance |
| Timeline |
| Hua Nan Financial |
| Shinkong Insurance |
Hua Nan and Shinkong Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Nan and Shinkong Insurance
The main advantage of trading using opposite Hua Nan and Shinkong Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Nan position performs unexpectedly, Shinkong Insurance 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 Shinkong Insurance will offset losses from the drop in Shinkong Insurance's long position.| Hua Nan vs. Central Reinsurance Corp | Hua Nan vs. Huaku Development Co | Hua Nan vs. Fubon Financial Holding |
| Shinkong Insurance vs. Central Reinsurance Corp | Shinkong Insurance vs. Huaku Development Co | Shinkong Insurance vs. Fubon Financial Holding | Shinkong Insurance vs. Chailease Holding Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |