Correlation Between Tainet Communication and Shih Kuen
Can any of the company-specific risk be diversified away by investing in both Tainet Communication and Shih Kuen 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 Tainet Communication and Shih Kuen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainet Communication System and Shih Kuen Plastics, you can compare the effects of market volatilities on Tainet Communication and Shih Kuen 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 Tainet Communication with a short position of Shih Kuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainet Communication and Shih Kuen.
Diversification Opportunities for Tainet Communication and Shih Kuen
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tainet and Shih is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tainet Communication System and Shih Kuen Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Kuen Plastics and Tainet Communication 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 Tainet Communication System are associated (or correlated) with Shih Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Kuen Plastics has no effect on the direction of Tainet Communication i.e., Tainet Communication and Shih Kuen go up and down completely randomly.
Pair Corralation between Tainet Communication and Shih Kuen
Assuming the 90 days trading horizon Tainet Communication System is expected to generate 1.77 times more return on investment than Shih Kuen. However, Tainet Communication is 1.77 times more volatile than Shih Kuen Plastics. It trades about 0.05 of its potential returns per unit of risk. Shih Kuen Plastics is currently generating about 0.06 per unit of risk. If you would invest 5,280 in Tainet Communication System on September 2, 2024 and sell it today you would earn a total of 2,690 from holding Tainet Communication System or generate 50.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainet Communication System vs. Shih Kuen Plastics
Performance |
| Timeline |
| Tainet Communication |
| Shih Kuen Plastics |
Tainet Communication and Shih Kuen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainet Communication and Shih Kuen
The main advantage of trading using opposite Tainet Communication and Shih Kuen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainet Communication position performs unexpectedly, Shih Kuen 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 Shih Kuen will offset losses from the drop in Shih Kuen's long position.| Tainet Communication vs. Shanghai Commercial Savings | Tainet Communication vs. Genovate Biotechnology Co | Tainet Communication vs. Tehmag Foods | Tainet Communication vs. Vate Technology Co |
| Shih Kuen vs. Wha Yu Industrial | Shih Kuen vs. Tsang Yow Industrial | Shih Kuen vs. TWOWAY Communications | Shih Kuen vs. Tex Ray Industrial 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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