Correlation Between Shin Kong and BES Engineering
Can any of the company-specific risk be diversified away by investing in both Shin Kong and BES Engineering 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 BES Engineering 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 BES Engineering Co, you can compare the effects of market volatilities on Shin Kong and BES Engineering 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 BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and BES Engineering.
Diversification Opportunities for Shin Kong and BES Engineering
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shin and BES is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering 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 BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of Shin Kong i.e., Shin Kong and BES Engineering go up and down completely randomly.
Pair Corralation between Shin Kong and BES Engineering
Assuming the 90 days trading horizon Shin Kong Financial is expected to generate 0.26 times more return on investment than BES Engineering. However, Shin Kong Financial is 3.91 times less risky than BES Engineering. It trades about 0.32 of its potential returns per unit of risk. BES Engineering Co is currently generating about -0.08 per unit of risk. If you would invest 1,185 in Shin Kong Financial on October 26, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Kong Financial vs. BES Engineering Co
Performance |
| Timeline |
| Shin Kong Financial |
| BES Engineering |
Shin Kong and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Kong and BES Engineering
The main advantage of trading using opposite Shin Kong and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, BES Engineering 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| Shin Kong vs. Cathay Financial Holding | Shin Kong vs. Taishin Financial Holding | Shin Kong vs. Fubon Financial Holding | Shin Kong vs. CTBC Financial Holding |
| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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