Correlation Between Shin Kong and Audix Corp
Can any of the company-specific risk be diversified away by investing in both Shin Kong and Audix Corp 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 Audix Corp 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 Audix Corp, you can compare the effects of market volatilities on Shin Kong and Audix Corp 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 Audix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and Audix Corp.
Diversification Opportunities for Shin Kong and Audix Corp
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Shin and Audix is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Audix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audix Corp 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 Audix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audix Corp has no effect on the direction of Shin Kong i.e., Shin Kong and Audix Corp go up and down completely randomly.
Pair Corralation between Shin Kong and Audix Corp
Assuming the 90 days trading horizon Shin Kong Financial is expected to generate 1.17 times more return on investment than Audix Corp. However, Shin Kong is 1.17 times more volatile than Audix Corp. It trades about 0.39 of its potential returns per unit of risk. Audix Corp is currently generating about -0.52 per unit of risk. If you would invest 1,185 in Shin Kong Financial on November 3, 2024 and sell it today you would earn a total of 45.00 from holding Shin Kong Financial or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Kong Financial vs. Audix Corp
Performance |
| Timeline |
| Shin Kong Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Audix Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shin Kong and Audix Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Kong and Audix Corp
The main advantage of trading using opposite Shin Kong and Audix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, Audix Corp 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 Audix Corp will offset losses from the drop in Audix Corp's long position.The idea behind Shin Kong Financial and Audix Corp 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.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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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