Correlation Between Shin Kong and EnTie Commercial
Can any of the company-specific risk be diversified away by investing in both Shin Kong and EnTie Commercial 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 EnTie Commercial 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 EnTie Commercial Bank, you can compare the effects of market volatilities on Shin Kong and EnTie Commercial 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 EnTie Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and EnTie Commercial.
Diversification Opportunities for Shin Kong and EnTie Commercial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shin and EnTie is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and EnTie Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnTie Commercial Bank 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 EnTie Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnTie Commercial Bank has no effect on the direction of Shin Kong i.e., Shin Kong and EnTie Commercial go up and down completely randomly.
Pair Corralation between Shin Kong and EnTie Commercial
Assuming the 90 days trading horizon Shin Kong is expected to generate 1.01 times less return on investment than EnTie Commercial. But when comparing it to its historical volatility, Shin Kong Financial is 7.93 times less risky than EnTie Commercial. It trades about 0.14 of its potential returns per unit of risk. EnTie Commercial Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,410 in EnTie Commercial Bank on September 13, 2024 and sell it today you would earn a total of 5.00 from holding EnTie Commercial Bank or generate 0.35% 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. EnTie Commercial Bank
Performance |
| Timeline |
| Shin Kong Financial |
| EnTie Commercial Bank |
Shin Kong and EnTie Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Kong and EnTie Commercial
The main advantage of trading using opposite Shin Kong and EnTie Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, EnTie Commercial 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 EnTie Commercial will offset losses from the drop in EnTie Commercial's long position.| Shin Kong vs. Tait Marketing Distribution | Shin Kong vs. ALFORMER Industrial Co | Shin Kong vs. Singtex Industrial Co | Shin Kong vs. uPI Semiconductor Corp |
| EnTie Commercial vs. Central Reinsurance Corp | EnTie Commercial vs. Huaku Development Co | EnTie Commercial vs. Fubon Financial Holding | EnTie Commercial vs. Chailease Holding Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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