Correlation Between Shin Kong and GeneFerm Biotechnology
Can any of the company-specific risk be diversified away by investing in both Shin Kong and GeneFerm Biotechnology 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 Shin Kong and GeneFerm Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Kong Financial and GeneFerm Biotechnology Co, you can compare the effects of market volatilities on Shin Kong and GeneFerm Biotechnology 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 Shin Kong with a short position of GeneFerm Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and GeneFerm Biotechnology.
Diversification Opportunities for Shin Kong and GeneFerm Biotechnology
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shin and GeneFerm is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and GeneFerm Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneFerm Biotechnology and Shin Kong 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 Shin Kong Financial are associated (or correlated) with GeneFerm Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneFerm Biotechnology has no effect on the direction of Shin Kong i.e., Shin Kong and GeneFerm Biotechnology go up and down completely randomly.
Pair Corralation between Shin Kong and GeneFerm Biotechnology
Assuming the 90 days trading horizon Shin Kong Financial is expected to generate 0.85 times more return on investment than GeneFerm Biotechnology. However, Shin Kong Financial is 1.18 times less risky than GeneFerm Biotechnology. It trades about 0.1 of its potential returns per unit of risk. GeneFerm Biotechnology Co is currently generating about -0.03 per unit of risk. If you would invest 810.00 in Shin Kong Financial on September 1, 2024 and sell it today you would earn a total of 345.00 from holding Shin Kong Financial or generate 42.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Kong Financial vs. GeneFerm Biotechnology Co
Performance |
| Timeline |
| Shin Kong Financial |
| GeneFerm Biotechnology |
Shin Kong and GeneFerm Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Kong and GeneFerm Biotechnology
The main advantage of trading using opposite Shin Kong and GeneFerm Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, GeneFerm Biotechnology 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 GeneFerm Biotechnology will offset losses from the drop in GeneFerm Biotechnology's long position.| Shin Kong vs. Central Reinsurance Corp | Shin Kong vs. Huaku Development Co | Shin Kong 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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