Correlation Between Sports Gear and Shieh Yih
Can any of the company-specific risk be diversified away by investing in both Sports Gear and Shieh Yih 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 Shieh Yih 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 Shieh Yih Machinery, you can compare the effects of market volatilities on Sports Gear and Shieh Yih 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 Shieh Yih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Gear and Shieh Yih.
Diversification Opportunities for Sports Gear and Shieh Yih
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sports and Shieh is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sports Gear Co and Shieh Yih Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shieh Yih Machinery 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 Shieh Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shieh Yih Machinery has no effect on the direction of Sports Gear i.e., Sports Gear and Shieh Yih go up and down completely randomly.
Pair Corralation between Sports Gear and Shieh Yih
Assuming the 90 days trading horizon Sports Gear Co is expected to generate 1.33 times more return on investment than Shieh Yih. However, Sports Gear is 1.33 times more volatile than Shieh Yih Machinery. It trades about 0.22 of its potential returns per unit of risk. Shieh Yih Machinery is currently generating about -0.26 per unit of risk. If you would invest 12,300 in Sports Gear Co on November 4, 2024 and sell it today you would earn a total of 1,300 from holding Sports Gear Co or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sports Gear Co vs. Shieh Yih Machinery
Performance |
| Timeline |
| Sports Gear |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shieh Yih Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sports Gear and Shieh Yih Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sports Gear and Shieh Yih
The main advantage of trading using opposite Sports Gear and Shieh Yih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Gear position performs unexpectedly, Shieh Yih 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 Shieh Yih will offset losses from the drop in Shieh Yih's long position.The idea behind Sports Gear Co and Shieh Yih Machinery 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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