Correlation Between Taiwan Secom and Shin Kong
Can any of the company-specific risk be diversified away by investing in both Taiwan Secom and Shin Kong 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 Taiwan Secom and Shin Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Secom Co and Shin Kong Financial, you can compare the effects of market volatilities on Taiwan Secom and Shin Kong 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 Taiwan Secom with a short position of Shin Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Secom and Shin Kong.
Diversification Opportunities for Taiwan Secom and Shin Kong
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Shin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Secom Co and Shin Kong Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Kong Financial and Taiwan Secom 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 Taiwan Secom Co are associated (or correlated) with Shin Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Kong Financial has no effect on the direction of Taiwan Secom i.e., Taiwan Secom and Shin Kong go up and down completely randomly.
Pair Corralation between Taiwan Secom and Shin Kong
Assuming the 90 days trading horizon Taiwan Secom Co is expected to under-perform the Shin Kong. In addition to that, Taiwan Secom is 2.48 times more volatile than Shin Kong Financial. It trades about -0.15 of its total potential returns per unit of risk. Shin Kong Financial is currently generating about 0.11 per unit of volatility. If you would invest 1,135 in Shin Kong Financial on September 1, 2024 and sell it today you would earn a total of 20.00 from holding Shin Kong Financial or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Secom Co vs. Shin Kong Financial
Performance |
| Timeline |
| Taiwan Secom |
| Shin Kong Financial |
Taiwan Secom and Shin Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Secom and Shin Kong
The main advantage of trading using opposite Taiwan Secom and Shin Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Secom position performs unexpectedly, Shin Kong 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 Kong will offset losses from the drop in Shin Kong's long position.| Taiwan Secom vs. Taiwan Shin Kong | Taiwan Secom vs. President Chain Store | Taiwan Secom vs. Yulon Finance Corp | Taiwan Secom vs. Giant Manufacturing Co |
| Shin Kong vs. Central Reinsurance Corp | Shin Kong vs. Huaku Development Co | Shin Kong vs. Fubon Financial Holding |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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