Correlation Between CHINA DEVELOPMENT and Shinkong Insurance
Can any of the company-specific risk be diversified away by investing in both CHINA DEVELOPMENT 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 CHINA DEVELOPMENT and Shinkong Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA DEVELOPMENT FINANCIAL and Shinkong Insurance Co, you can compare the effects of market volatilities on CHINA DEVELOPMENT 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 CHINA DEVELOPMENT with a short position of Shinkong Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA DEVELOPMENT and Shinkong Insurance.
Diversification Opportunities for CHINA DEVELOPMENT and Shinkong Insurance
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Shinkong is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CHINA DEVELOPMENT 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 CHINA DEVELOPMENT 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 CHINA DEVELOPMENT 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 CHINA DEVELOPMENT i.e., CHINA DEVELOPMENT and Shinkong Insurance go up and down completely randomly.
Pair Corralation between CHINA DEVELOPMENT and Shinkong Insurance
Assuming the 90 days trading horizon CHINA DEVELOPMENT is expected to generate 4.42 times less return on investment than Shinkong Insurance. But when comparing it to its historical volatility, CHINA DEVELOPMENT FINANCIAL is 3.23 times less risky than Shinkong Insurance. It trades about 0.09 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA DEVELOPMENT FINANCIAL vs. Shinkong Insurance Co
Performance |
| Timeline |
| CHINA DEVELOPMENT |
| Shinkong Insurance |
CHINA DEVELOPMENT and Shinkong Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA DEVELOPMENT and Shinkong Insurance
The main advantage of trading using opposite CHINA DEVELOPMENT and Shinkong Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA DEVELOPMENT 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.| CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Mid Cap | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Electronics | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Top |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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