Correlation Between Sports Gear and Sheng Yu
Can any of the company-specific risk be diversified away by investing in both Sports Gear and Sheng Yu 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 Sports Gear and Sheng Yu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sports Gear Co and Sheng Yu Steel, you can compare the effects of market volatilities on Sports Gear and Sheng Yu 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 Sports Gear with a short position of Sheng Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Gear and Sheng Yu.
Diversification Opportunities for Sports Gear and Sheng Yu
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sports and Sheng is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sports Gear Co and Sheng Yu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sheng Yu Steel and Sports Gear 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 Sports Gear Co are associated (or correlated) with Sheng Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sheng Yu Steel has no effect on the direction of Sports Gear i.e., Sports Gear and Sheng Yu go up and down completely randomly.
Pair Corralation between Sports Gear and Sheng Yu
Assuming the 90 days trading horizon Sports Gear Co is expected to generate 5.36 times more return on investment than Sheng Yu. However, Sports Gear is 5.36 times more volatile than Sheng Yu Steel. It trades about 0.18 of its potential returns per unit of risk. Sheng Yu Steel is currently generating about -0.29 per unit of risk. If you would invest 11,900 in Sports Gear Co on September 1, 2024 and sell it today you would earn a total of 1,950 from holding Sports Gear Co or generate 16.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sports Gear Co vs. Sheng Yu Steel
Performance |
| Timeline |
| Sports Gear |
| Sheng Yu Steel |
Sports Gear and Sheng Yu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sports Gear and Sheng Yu
The main advantage of trading using opposite Sports Gear and Sheng Yu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Gear position performs unexpectedly, Sheng Yu 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 Sheng Yu will offset losses from the drop in Sheng Yu's long position.| Sports Gear vs. Giant Manufacturing Co | Sports Gear vs. Merida Industry Co | Sports Gear vs. Johnson Health Tech | Sports Gear vs. Power Wind Health |
| Sheng Yu vs. Yieh Phui Enterprise | Sheng Yu vs. Tung Ho Steel | Sheng Yu vs. Feng Hsin Steel | Sheng Yu vs. Chung Hung Steel |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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