Correlation Between Shih Kuen and Cheng Shin
Can any of the company-specific risk be diversified away by investing in both Shih Kuen and Cheng Shin 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 Shih Kuen and Cheng Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shih Kuen Plastics and Cheng Shin Rubber, you can compare the effects of market volatilities on Shih Kuen and Cheng Shin 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 Shih Kuen with a short position of Cheng Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shih Kuen and Cheng Shin.
Diversification Opportunities for Shih Kuen and Cheng Shin
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shih and Cheng is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shih Kuen Plastics and Cheng Shin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Shin Rubber and Shih Kuen 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 Shih Kuen Plastics are associated (or correlated) with Cheng Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Shin Rubber has no effect on the direction of Shih Kuen i.e., Shih Kuen and Cheng Shin go up and down completely randomly.
Pair Corralation between Shih Kuen and Cheng Shin
Assuming the 90 days trading horizon Shih Kuen Plastics is expected to under-perform the Cheng Shin. But the stock apears to be less risky and, when comparing its historical volatility, Shih Kuen Plastics is 2.29 times less risky than Cheng Shin. The stock trades about -0.2 of its potential returns per unit of risk. The Cheng Shin Rubber is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,635 in Cheng Shin Rubber on September 4, 2024 and sell it today you would earn a total of 365.00 from holding Cheng Shin Rubber or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shih Kuen Plastics vs. Cheng Shin Rubber
Performance |
| Timeline |
| Shih Kuen Plastics |
| Cheng Shin Rubber |
Shih Kuen and Cheng Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shih Kuen and Cheng Shin
The main advantage of trading using opposite Shih Kuen and Cheng Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shih Kuen position performs unexpectedly, Cheng Shin 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 Cheng Shin will offset losses from the drop in Cheng Shin's long position.| Shih Kuen vs. Cheng Shin Rubber | Shih Kuen vs. Nankang Rubber Tire | Shih Kuen vs. Asia Polymer Corp | Shih Kuen vs. Ocean Plastics Co |
| Cheng Shin vs. Tainan Spinning Co | Cheng Shin vs. Chia Her Industrial | Cheng Shin vs. WiseChip Semiconductor | Cheng Shin vs. Novatek Microelectronics 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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