Correlation Between Shin Kong and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Shin Kong and Mercuries Life 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 Mercuries Life 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 Mercuries Life Insurance, you can compare the effects of market volatilities on Shin Kong and Mercuries Life 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 Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and Mercuries Life.
Diversification Opportunities for Shin Kong and Mercuries Life
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin and Mercuries is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance 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 Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of Shin Kong i.e., Shin Kong and Mercuries Life go up and down completely randomly.
Pair Corralation between Shin Kong and Mercuries Life
Assuming the 90 days trading horizon Shin Kong Financial is expected to generate 0.92 times more return on investment than Mercuries Life. However, Shin Kong Financial is 1.09 times less risky than Mercuries Life. It trades about 0.05 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about 0.02 per unit of risk. If you would invest 877.00 in Shin Kong Financial on August 28, 2024 and sell it today you would earn a total of 298.00 from holding Shin Kong Financial or generate 33.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Kong Financial vs. Mercuries Life Insurance
Performance |
| Timeline |
| Shin Kong Financial |
| Mercuries Life Insurance |
Shin Kong and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Kong and Mercuries Life
The main advantage of trading using opposite Shin Kong and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, Mercuries Life 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 Mercuries Life will offset losses from the drop in Mercuries Life'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 |
| Mercuries Life vs. CSBC Corp Taiwan | Mercuries Life vs. Hung Sheng Construction | Mercuries Life vs. Ton Yi Industrial | Mercuries Life vs. De Licacy Industrial |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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