Correlation Between Simple Mart and Shiny Chemical
Can any of the company-specific risk be diversified away by investing in both Simple Mart and Shiny Chemical 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 Simple Mart and Shiny Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simple Mart Retail and Shiny Chemical Industrial, you can compare the effects of market volatilities on Simple Mart and Shiny Chemical 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 Simple Mart with a short position of Shiny Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Shiny Chemical.
Diversification Opportunities for Simple Mart and Shiny Chemical
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simple and Shiny is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Shiny Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shiny Chemical Industrial and Simple Mart 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 Simple Mart Retail are associated (or correlated) with Shiny Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shiny Chemical Industrial has no effect on the direction of Simple Mart i.e., Simple Mart and Shiny Chemical go up and down completely randomly.
Pair Corralation between Simple Mart and Shiny Chemical
Assuming the 90 days trading horizon Simple Mart Retail is expected to generate 0.27 times more return on investment than Shiny Chemical. However, Simple Mart Retail is 3.77 times less risky than Shiny Chemical. It trades about 0.04 of its potential returns per unit of risk. Shiny Chemical Industrial is currently generating about -0.06 per unit of risk. If you would invest 4,195 in Simple Mart Retail on September 4, 2024 and sell it today you would earn a total of 15.00 from holding Simple Mart Retail or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. Shiny Chemical Industrial
Performance |
| Timeline |
| Simple Mart Retail |
| Shiny Chemical Industrial |
Simple Mart and Shiny Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and Shiny Chemical
The main advantage of trading using opposite Simple Mart and Shiny Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, Shiny Chemical 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 Shiny Chemical will offset losses from the drop in Shiny Chemical's long position.| Simple Mart vs. Taiwan Semiconductor Manufacturing | Simple Mart vs. Hon Hai Precision | Simple Mart vs. MediaTek | Simple Mart vs. Chunghwa Telecom 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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