Correlation Between Power Wind and Shih Kuen
Can any of the company-specific risk be diversified away by investing in both Power Wind and Shih Kuen 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 Power Wind and Shih Kuen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Wind Health and Shih Kuen Plastics, you can compare the effects of market volatilities on Power Wind and Shih Kuen 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 Power Wind with a short position of Shih Kuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Wind and Shih Kuen.
Diversification Opportunities for Power Wind and Shih Kuen
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Power and Shih is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Power Wind Health and Shih Kuen Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Kuen Plastics and Power Wind 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 Power Wind Health are associated (or correlated) with Shih Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Kuen Plastics has no effect on the direction of Power Wind i.e., Power Wind and Shih Kuen go up and down completely randomly.
Pair Corralation between Power Wind and Shih Kuen
Assuming the 90 days trading horizon Power Wind Health is expected to generate 0.68 times more return on investment than Shih Kuen. However, Power Wind Health is 1.47 times less risky than Shih Kuen. It trades about -0.09 of its potential returns per unit of risk. Shih Kuen Plastics is currently generating about -0.19 per unit of risk. If you would invest 11,650 in Power Wind Health on August 26, 2024 and sell it today you would lose (200.00) from holding Power Wind Health or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Wind Health vs. Shih Kuen Plastics
Performance |
| Timeline |
| Power Wind Health |
| Shih Kuen Plastics |
Power Wind and Shih Kuen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Wind and Shih Kuen
The main advantage of trading using opposite Power Wind and Shih Kuen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Wind position performs unexpectedly, Shih Kuen 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 Shih Kuen will offset losses from the drop in Shih Kuen's long position.| Power Wind vs. Sunny Friend Environmental | Power Wind vs. Cleanaway Co | Power Wind vs. Charoen Pokphand Enterprise | Power Wind vs. TTET Union Corp |
| Shih Kuen vs. SS Healthcare Holding | Shih Kuen vs. Power Wind Health | Shih Kuen vs. Pacific Hospital Supply | Shih Kuen vs. Davicom Semiconductor |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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