Correlation Between Shin Shin and Uni President
Can any of the company-specific risk be diversified away by investing in both Shin Shin and Uni President 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 Shin and Uni President into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Shin Co and Uni President Enterprises Corp, you can compare the effects of market volatilities on Shin Shin and Uni President 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 Shin with a short position of Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Shin and Uni President.
Diversification Opportunities for Shin Shin and Uni President
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shin and Uni is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shin Shin Co and Uni President Enterprises Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President Enterp and Shin Shin 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 Shin Co are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President Enterp has no effect on the direction of Shin Shin i.e., Shin Shin and Uni President go up and down completely randomly.
Pair Corralation between Shin Shin and Uni President
Assuming the 90 days trading horizon Shin Shin is expected to generate 1.67 times less return on investment than Uni President. In addition to that, Shin Shin is 1.3 times more volatile than Uni President Enterprises Corp. It trades about 0.03 of its total potential returns per unit of risk. Uni President Enterprises Corp is currently generating about 0.07 per unit of volatility. If you would invest 6,308 in Uni President Enterprises Corp on September 4, 2024 and sell it today you would earn a total of 2,302 from holding Uni President Enterprises Corp or generate 36.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Shin Shin Co vs. Uni President Enterprises Corp
Performance |
| Timeline |
| Shin Shin |
| Uni President Enterp |
Shin Shin and Uni President Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Shin and Uni President
The main advantage of trading using opposite Shin Shin and Uni President positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Shin position performs unexpectedly, Uni President 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 Uni President will offset losses from the drop in Uni President's long position.| Shin Shin vs. Les Enphants Co | Shin Shin vs. First Hotel Co | Shin Shin vs. Shui Mu International Co | Shin Shin vs. Hung Sheng Construction |
| Uni President vs. President Chain Store | Uni President vs. Formosa Plastics Corp | Uni President vs. Nan Ya Plastics | Uni President vs. Taiwan Cement Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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