Correlation Between Shih Kuen and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Shih Kuen and Asia Electronic 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 Asia Electronic 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 Asia Electronic Material, you can compare the effects of market volatilities on Shih Kuen and Asia Electronic 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 Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shih Kuen and Asia Electronic.
Diversification Opportunities for Shih Kuen and Asia Electronic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shih and Asia is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Shih Kuen Plastics and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material 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 Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Shih Kuen i.e., Shih Kuen and Asia Electronic go up and down completely randomly.
Pair Corralation between Shih Kuen and Asia Electronic
Assuming the 90 days trading horizon Shih Kuen Plastics is expected to under-perform the Asia Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Shih Kuen Plastics is 1.47 times less risky than Asia Electronic. The stock trades about -0.05 of its potential returns per unit of risk. The Asia Electronic Material is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,210 in Asia Electronic Material on September 3, 2024 and sell it today you would lose (165.00) from holding Asia Electronic Material or give up 7.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shih Kuen Plastics vs. Asia Electronic Material
Performance |
| Timeline |
| Shih Kuen Plastics |
| Asia Electronic Material |
Shih Kuen and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shih Kuen and Asia Electronic
The main advantage of trading using opposite Shih Kuen and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shih Kuen position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic'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 |
| Asia Electronic vs. Hon Hai Precision | Asia Electronic vs. Delta Electronics | Asia Electronic vs. LARGAN Precision Co | Asia Electronic vs. AU Optronics |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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