Correlation Between Aten International and I Sheng
Can any of the company-specific risk be diversified away by investing in both Aten International and I Sheng 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 Aten International and I Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aten International Co and I Sheng Electric Wire, you can compare the effects of market volatilities on Aten International and I Sheng 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 Aten International with a short position of I Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aten International and I Sheng.
Diversification Opportunities for Aten International and I Sheng
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aten and 6115 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aten International Co and I Sheng Electric Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Sheng Electric and Aten International 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 Aten International Co are associated (or correlated) with I Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Sheng Electric has no effect on the direction of Aten International i.e., Aten International and I Sheng go up and down completely randomly.
Pair Corralation between Aten International and I Sheng
Assuming the 90 days trading horizon Aten International Co is expected to generate 1.01 times more return on investment than I Sheng. However, Aten International is 1.01 times more volatile than I Sheng Electric Wire. It trades about -0.06 of its potential returns per unit of risk. I Sheng Electric Wire is currently generating about -0.09 per unit of risk. If you would invest 7,520 in Aten International Co on November 2, 2024 and sell it today you would lose (40.00) from holding Aten International Co or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aten International Co vs. I Sheng Electric Wire
Performance |
| Timeline |
| Aten International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| I Sheng Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aten International and I Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aten International and I Sheng
The main advantage of trading using opposite Aten International and I Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aten International position performs unexpectedly, I Sheng 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 I Sheng will offset losses from the drop in I Sheng's long position.The idea behind Aten International Co and I Sheng Electric Wire 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.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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