Correlation Between Shin Ruenn and Zhen Ding
Can any of the company-specific risk be diversified away by investing in both Shin Ruenn and Zhen Ding 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 Shin Ruenn and Zhen Ding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Ruenn Development and Zhen Ding Technology, you can compare the effects of market volatilities on Shin Ruenn and Zhen Ding 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 Shin Ruenn with a short position of Zhen Ding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Ruenn and Zhen Ding.
Diversification Opportunities for Shin Ruenn and Zhen Ding
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin and Zhen is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shin Ruenn Development and Zhen Ding Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhen Ding Technology and Shin Ruenn 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 Shin Ruenn Development are associated (or correlated) with Zhen Ding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhen Ding Technology has no effect on the direction of Shin Ruenn i.e., Shin Ruenn and Zhen Ding go up and down completely randomly.
Pair Corralation between Shin Ruenn and Zhen Ding
Assuming the 90 days trading horizon Shin Ruenn Development is expected to generate 1.36 times more return on investment than Zhen Ding. However, Shin Ruenn is 1.36 times more volatile than Zhen Ding Technology. It trades about 0.04 of its potential returns per unit of risk. Zhen Ding Technology is currently generating about 0.05 per unit of risk. If you would invest 5,570 in Shin Ruenn Development on August 27, 2024 and sell it today you would earn a total of 710.00 from holding Shin Ruenn Development or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Ruenn Development vs. Zhen Ding Technology
Performance |
| Timeline |
| Shin Ruenn Development |
| Zhen Ding Technology |
Shin Ruenn and Zhen Ding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Ruenn and Zhen Ding
The main advantage of trading using opposite Shin Ruenn and Zhen Ding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Ruenn position performs unexpectedly, Zhen Ding 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 Zhen Ding will offset losses from the drop in Zhen Ding's long position.| Shin Ruenn vs. Standard Foods Corp | Shin Ruenn vs. Jentech Precision Industrial | Shin Ruenn vs. De Licacy Industrial | Shin Ruenn vs. Shuang Bang Industrial |
| Zhen Ding vs. Novatek Microelectronics Corp | Zhen Ding vs. Quanta Computer | Zhen Ding vs. United Microelectronics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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