Correlation Between Shin Kong and Sinopower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Shin Kong and Sinopower Semiconductor 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 Sinopower Semiconductor 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 Sinopower Semiconductor, you can compare the effects of market volatilities on Shin Kong and Sinopower Semiconductor 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 Sinopower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and Sinopower Semiconductor.
Diversification Opportunities for Shin Kong and Sinopower Semiconductor
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shin and Sinopower is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Sinopower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopower Semiconductor 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 Sinopower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopower Semiconductor has no effect on the direction of Shin Kong i.e., Shin Kong and Sinopower Semiconductor go up and down completely randomly.
Pair Corralation between Shin Kong and Sinopower Semiconductor
Assuming the 90 days trading horizon Shin Kong Financial is expected to generate 0.38 times more return on investment than Sinopower Semiconductor. However, Shin Kong Financial is 2.65 times less risky than Sinopower Semiconductor. It trades about 0.21 of its potential returns per unit of risk. Sinopower Semiconductor is currently generating about -0.2 per unit of risk. If you would invest 1,140 in Shin Kong Financial on August 29, 2024 and sell it today you would earn a total of 35.00 from holding Shin Kong Financial or generate 3.07% 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. Sinopower Semiconductor
Performance |
| Timeline |
| Shin Kong Financial |
| Sinopower Semiconductor |
Shin Kong and Sinopower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Kong and Sinopower Semiconductor
The main advantage of trading using opposite Shin Kong and Sinopower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, Sinopower Semiconductor 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 Sinopower Semiconductor will offset losses from the drop in Sinopower Semiconductor's long position.| Shin Kong vs. Taiwan Secom Co | Shin Kong vs. TTET Union Corp | Shin Kong vs. China Steel Chemical | Shin Kong vs. Taiwan Shin Kong |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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