Correlation Between Information Technology and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Information Technology and Shinkong Synthetic 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 Information Technology and Shinkong Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Technology Total and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Information Technology and Shinkong Synthetic 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 Information Technology with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Technology and Shinkong Synthetic.
Diversification Opportunities for Information Technology and Shinkong Synthetic
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Information and Shinkong is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Information Technology Total and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and Information Technology 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 Information Technology Total are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Information Technology i.e., Information Technology and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Information Technology and Shinkong Synthetic
Assuming the 90 days trading horizon Information Technology Total is expected to generate 2.37 times more return on investment than Shinkong Synthetic. However, Information Technology is 2.37 times more volatile than Shinkong Synthetic Fiber. It trades about 0.03 of its potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about -0.01 per unit of risk. If you would invest 3,438 in Information Technology Total on September 3, 2024 and sell it today you would earn a total of 1,042 from holding Information Technology Total or generate 30.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Technology Total vs. Shinkong Synthetic Fiber
Performance |
| Timeline |
| Information Technology |
| Shinkong Synthetic Fiber |
Information Technology and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Technology and Shinkong Synthetic
The main advantage of trading using opposite Information Technology and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Technology position performs unexpectedly, Shinkong Synthetic 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 Synthetic will offset losses from the drop in Shinkong Synthetic's long position.| Information Technology vs. Digital China Holdings | Information Technology vs. Acer E Enabling Service | Information Technology vs. Sysage Technology Co | Information Technology vs. Green World Fintech |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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