Correlation Between Chailease Holding and Shinkong Textile
Can any of the company-specific risk be diversified away by investing in both Chailease Holding and Shinkong Textile 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 Chailease Holding and Shinkong Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chailease Holding Co and Shinkong Textile Co, you can compare the effects of market volatilities on Chailease Holding and Shinkong Textile 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 Chailease Holding with a short position of Shinkong Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chailease Holding and Shinkong Textile.
Diversification Opportunities for Chailease Holding and Shinkong Textile
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chailease and Shinkong is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Chailease Holding Co and Shinkong Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Textile and Chailease Holding 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 Chailease Holding Co are associated (or correlated) with Shinkong Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Textile has no effect on the direction of Chailease Holding i.e., Chailease Holding and Shinkong Textile go up and down completely randomly.
Pair Corralation between Chailease Holding and Shinkong Textile
Assuming the 90 days trading horizon Chailease Holding Co is expected to under-perform the Shinkong Textile. In addition to that, Chailease Holding is 1.72 times more volatile than Shinkong Textile Co. It trades about -0.09 of its total potential returns per unit of risk. Shinkong Textile Co is currently generating about -0.03 per unit of volatility. If you would invest 4,845 in Shinkong Textile Co on September 2, 2024 and sell it today you would lose (295.00) from holding Shinkong Textile Co or give up 6.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chailease Holding Co vs. Shinkong Textile Co
Performance |
| Timeline |
| Chailease Holding |
| Shinkong Textile |
Chailease Holding and Shinkong Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chailease Holding and Shinkong Textile
The main advantage of trading using opposite Chailease Holding and Shinkong Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chailease Holding position performs unexpectedly, Shinkong Textile 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 Shinkong Textile will offset losses from the drop in Shinkong Textile's long position.The idea behind Chailease Holding Co and Shinkong Textile Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Shinkong Textile vs. Shinkong Synthetic Fiber | Shinkong Textile vs. Formosa Taffeta Co | Shinkong Textile vs. Far Eastern New | Shinkong Textile vs. Tainan Spinning 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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