Correlation Between Shin Kong and Hua Nan
Can any of the company-specific risk be diversified away by investing in both Shin Kong and Hua Nan 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 Hua Nan 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 Hua Nan Financial, you can compare the effects of market volatilities on Shin Kong and Hua Nan 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 Hua Nan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and Hua Nan.
Diversification Opportunities for Shin Kong and Hua Nan
Very poor diversification
The 3 months correlation between Shin and Hua is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Hua Nan Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Nan Financial 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 Hua Nan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Nan Financial has no effect on the direction of Shin Kong i.e., Shin Kong and Hua Nan go up and down completely randomly.
Pair Corralation between Shin Kong and Hua Nan
Assuming the 90 days trading horizon Shin Kong is expected to generate 1.95 times less return on investment than Hua Nan. But when comparing it to its historical volatility, Shin Kong Financial is 1.89 times less risky than Hua Nan. It trades about 0.32 of its potential returns per unit of risk. Hua Nan Financial is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,605 in Hua Nan Financial on October 26, 2024 and sell it today you would earn a total of 195.00 from holding Hua Nan Financial or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Kong Financial vs. Hua Nan Financial
Performance |
| Timeline |
| Shin Kong Financial |
| Hua Nan Financial |
Shin Kong and Hua Nan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Kong and Hua Nan
The main advantage of trading using opposite Shin Kong and Hua Nan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, Hua Nan 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 Hua Nan will offset losses from the drop in Hua Nan'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 |
| Hua Nan vs. First Financial Holding | Hua Nan vs. Mega Financial Holding | Hua Nan vs. CTBC Financial Holding | Hua Nan vs. ESUN 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |