Correlation Between I Sheng and Arima Communications
Can any of the company-specific risk be diversified away by investing in both I Sheng and Arima Communications 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 I Sheng and Arima Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between I Sheng Electric Wire and Arima Communications Corp, you can compare the effects of market volatilities on I Sheng and Arima Communications 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 I Sheng with a short position of Arima Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Sheng and Arima Communications.
Diversification Opportunities for I Sheng and Arima Communications
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between 6115 and Arima is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding I Sheng Electric Wire and Arima Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arima Communications Corp and I Sheng 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 I Sheng Electric Wire are associated (or correlated) with Arima Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arima Communications Corp has no effect on the direction of I Sheng i.e., I Sheng and Arima Communications go up and down completely randomly.
Pair Corralation between I Sheng and Arima Communications
Assuming the 90 days trading horizon I Sheng is expected to generate 17.12 times less return on investment than Arima Communications. But when comparing it to its historical volatility, I Sheng Electric Wire is 21.42 times less risky than Arima Communications. It trades about 0.06 of its potential returns per unit of risk. Arima Communications Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 597.00 in Arima Communications Corp on September 13, 2024 and sell it today you would earn a total of 1,843 from holding Arima Communications Corp or generate 308.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
I Sheng Electric Wire vs. Arima Communications Corp
Performance |
| Timeline |
| I Sheng Electric |
| Arima Communications Corp |
I Sheng and Arima Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I Sheng and Arima Communications
The main advantage of trading using opposite I Sheng and Arima Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Sheng position performs unexpectedly, Arima Communications 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 Arima Communications will offset losses from the drop in Arima Communications' long position.| I Sheng vs. Yang Ming Marine | I Sheng vs. Wan Hai Lines | I Sheng vs. U Ming Marine Transport | I Sheng vs. Taiwan Navigation Co |
| Arima Communications vs. AU Optronics | Arima Communications vs. Innolux Corp | Arima Communications vs. Ruentex Development Co | Arima Communications vs. WiseChip Semiconductor |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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