Correlation Between Shanghai Commercial and EirGenix
Can any of the company-specific risk be diversified away by investing in both Shanghai Commercial and EirGenix 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 Shanghai Commercial and EirGenix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Commercial Savings and EirGenix, you can compare the effects of market volatilities on Shanghai Commercial and EirGenix 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 Shanghai Commercial with a short position of EirGenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Commercial and EirGenix.
Diversification Opportunities for Shanghai Commercial and EirGenix
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shanghai and EirGenix is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Commercial Savings and EirGenix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EirGenix and Shanghai Commercial 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 Shanghai Commercial Savings are associated (or correlated) with EirGenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EirGenix has no effect on the direction of Shanghai Commercial i.e., Shanghai Commercial and EirGenix go up and down completely randomly.
Pair Corralation between Shanghai Commercial and EirGenix
Assuming the 90 days trading horizon Shanghai Commercial Savings is expected to under-perform the EirGenix. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Commercial Savings is 1.68 times less risky than EirGenix. The stock trades about -0.1 of its potential returns per unit of risk. The EirGenix is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,030 in EirGenix on August 29, 2024 and sell it today you would earn a total of 1,080 from holding EirGenix or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Commercial Savings vs. EirGenix
Performance |
| Timeline |
| Shanghai Commercial |
| EirGenix |
Shanghai Commercial and EirGenix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Commercial and EirGenix
The main advantage of trading using opposite Shanghai Commercial and EirGenix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Commercial position performs unexpectedly, EirGenix 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 EirGenix will offset losses from the drop in EirGenix's long position.| Shanghai Commercial vs. Taiwan Secom Co | Shanghai Commercial vs. TTET Union Corp | Shanghai Commercial vs. China Steel Chemical | Shanghai Commercial vs. Taiwan Shin Kong |
| EirGenix vs. Elan Microelectronics Corp | EirGenix vs. Oceanic Beverages Co | EirGenix vs. Ambassador Hotel | EirGenix vs. Chung Lien Transportation |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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