Correlation Between Shin Kong and PChome Online
Can any of the company-specific risk be diversified away by investing in both Shin Kong and PChome Online 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 PChome Online 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 PChome Online, you can compare the effects of market volatilities on Shin Kong and PChome Online 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 PChome Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and PChome Online.
Diversification Opportunities for Shin Kong and PChome Online
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shin and PChome is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and PChome Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PChome Online 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 PChome Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PChome Online has no effect on the direction of Shin Kong i.e., Shin Kong and PChome Online go up and down completely randomly.
Pair Corralation between Shin Kong and PChome Online
Assuming the 90 days trading horizon Shin Kong Financial is expected to generate 0.61 times more return on investment than PChome Online. However, Shin Kong Financial is 1.64 times less risky than PChome Online. It trades about 0.05 of its potential returns per unit of risk. PChome Online is currently generating about -0.01 per unit of risk. If you would invest 896.00 in Shin Kong Financial on August 31, 2024 and sell it today you would earn a total of 274.00 from holding Shin Kong Financial or generate 30.58% 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. PChome Online
Performance |
| Timeline |
| Shin Kong Financial |
| PChome Online |
Shin Kong and PChome Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Kong and PChome Online
The main advantage of trading using opposite Shin Kong and PChome Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, PChome Online 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 PChome Online will offset losses from the drop in PChome Online'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 |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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