Correlation Between Shin Zu and Bin Chuan
Can any of the company-specific risk be diversified away by investing in both Shin Zu and Bin Chuan 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 Zu and Bin Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Zu Shing and Bin Chuan Enterprise, you can compare the effects of market volatilities on Shin Zu and Bin Chuan 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 Zu with a short position of Bin Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Zu and Bin Chuan.
Diversification Opportunities for Shin Zu and Bin Chuan
Pay attention - limited upside
The 3 months correlation between Shin and Bin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shin Zu Shing and Bin Chuan Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bin Chuan Enterprise and Shin Zu 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 Zu Shing are associated (or correlated) with Bin Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bin Chuan Enterprise has no effect on the direction of Shin Zu i.e., Shin Zu and Bin Chuan go up and down completely randomly.
Pair Corralation between Shin Zu and Bin Chuan
Assuming the 90 days trading horizon Shin Zu is expected to generate 3.66 times less return on investment than Bin Chuan. But when comparing it to its historical volatility, Shin Zu Shing is 1.28 times less risky than Bin Chuan. It trades about 0.22 of its potential returns per unit of risk. Bin Chuan Enterprise is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest 3,995 in Bin Chuan Enterprise on September 12, 2024 and sell it today you would earn a total of 2,855 from holding Bin Chuan Enterprise or generate 71.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Zu Shing vs. Bin Chuan Enterprise
Performance |
| Timeline |
| Shin Zu Shing |
| Bin Chuan Enterprise |
Shin Zu and Bin Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Zu and Bin Chuan
The main advantage of trading using opposite Shin Zu and Bin Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Zu position performs unexpectedly, Bin Chuan 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 Bin Chuan will offset losses from the drop in Bin Chuan's long position.| Shin Zu vs. Yang Ming Marine | Shin Zu vs. Wan Hai Lines | Shin Zu vs. U Ming Marine Transport | Shin Zu vs. Taiwan Navigation Co |
| Bin Chuan vs. Catcher Technology Co | Bin Chuan vs. Solar Applied Materials | Bin Chuan vs. Evergreen Steel Corp | Bin Chuan vs. Shin Zu Shing |
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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