Correlation Between Great Taipei and Shin Shin
Can any of the company-specific risk be diversified away by investing in both Great Taipei and Shin Shin 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 Great Taipei and Shin Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Taipei Gas and Shin Shin Natural, you can compare the effects of market volatilities on Great Taipei and Shin Shin 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 Great Taipei with a short position of Shin Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Taipei and Shin Shin.
Diversification Opportunities for Great Taipei and Shin Shin
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Shin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Great Taipei Gas and Shin Shin Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Shin Natural and Great Taipei 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 Great Taipei Gas are associated (or correlated) with Shin Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Shin Natural has no effect on the direction of Great Taipei i.e., Great Taipei and Shin Shin go up and down completely randomly.
Pair Corralation between Great Taipei and Shin Shin
Assuming the 90 days trading horizon Great Taipei Gas is expected to under-perform the Shin Shin. But the stock apears to be less risky and, when comparing its historical volatility, Great Taipei Gas is 2.16 times less risky than Shin Shin. The stock trades about -0.12 of its potential returns per unit of risk. The Shin Shin Natural is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,150 in Shin Shin Natural on September 3, 2024 and sell it today you would lose (125.00) from holding Shin Shin Natural or give up 3.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Taipei Gas vs. Shin Shin Natural
Performance |
| Timeline |
| Great Taipei Gas |
| Shin Shin Natural |
Great Taipei and Shin Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Taipei and Shin Shin
The main advantage of trading using opposite Great Taipei and Shin Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Taipei position performs unexpectedly, Shin Shin 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 Shin Shin will offset losses from the drop in Shin Shin's long position.| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Shin Shin Natural |
| Shin Shin vs. Great Taipei Gas | Shin Shin vs. Shin Hai Gas | Shin Shin vs. Taiwan Secom Co | Shin Shin vs. Hsin Kao Gas |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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