Correlation Between Shih Kuen and Advanced Echem
Can any of the company-specific risk be diversified away by investing in both Shih Kuen and Advanced Echem 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 Advanced Echem 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 Advanced Echem Materials, you can compare the effects of market volatilities on Shih Kuen and Advanced Echem 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 Advanced Echem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shih Kuen and Advanced Echem.
Diversification Opportunities for Shih Kuen and Advanced Echem
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shih and Advanced is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shih Kuen Plastics and Advanced Echem Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Echem Materials 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 Advanced Echem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Echem Materials has no effect on the direction of Shih Kuen i.e., Shih Kuen and Advanced Echem go up and down completely randomly.
Pair Corralation between Shih Kuen and Advanced Echem
Assuming the 90 days trading horizon Shih Kuen Plastics is expected to under-perform the Advanced Echem. But the stock apears to be less risky and, when comparing its historical volatility, Shih Kuen Plastics is 1.7 times less risky than Advanced Echem. The stock trades about -0.05 of its potential returns per unit of risk. The Advanced Echem Materials is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 61,077 in Advanced Echem Materials on September 3, 2024 and sell it today you would earn a total of 5,923 from holding Advanced Echem Materials or generate 9.7% 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. Advanced Echem Materials
Performance |
| Timeline |
| Shih Kuen Plastics |
| Advanced Echem Materials |
Shih Kuen and Advanced Echem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shih Kuen and Advanced Echem
The main advantage of trading using opposite Shih Kuen and Advanced Echem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shih Kuen position performs unexpectedly, Advanced Echem 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 Advanced Echem will offset losses from the drop in Advanced Echem'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 |
| Advanced Echem vs. Taiwan Semiconductor Manufacturing | Advanced Echem vs. Hon Hai Precision | Advanced Echem vs. MediaTek | Advanced Echem 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |