Correlation Between Shin Hai and Taiwan Shin
Can any of the company-specific risk be diversified away by investing in both Shin Hai and Taiwan 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 Shin Hai and Taiwan Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Hai Gas and Taiwan Shin Kong, you can compare the effects of market volatilities on Shin Hai and Taiwan 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 Shin Hai with a short position of Taiwan Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Hai and Taiwan Shin.
Diversification Opportunities for Shin Hai and Taiwan Shin
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shin and Taiwan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shin Hai Gas and Taiwan Shin Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Shin Kong and Shin Hai 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 Shin Hai Gas are associated (or correlated) with Taiwan Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Shin Kong has no effect on the direction of Shin Hai i.e., Shin Hai and Taiwan Shin go up and down completely randomly.
Pair Corralation between Shin Hai and Taiwan Shin
Assuming the 90 days trading horizon Shin Hai Gas is expected to generate 1.95 times more return on investment than Taiwan Shin. However, Shin Hai is 1.95 times more volatile than Taiwan Shin Kong. It trades about -0.01 of its potential returns per unit of risk. Taiwan Shin Kong is currently generating about -0.1 per unit of risk. If you would invest 5,280 in Shin Hai Gas on September 3, 2024 and sell it today you would lose (10.00) from holding Shin Hai Gas or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Hai Gas vs. Taiwan Shin Kong
Performance |
| Timeline |
| Shin Hai Gas |
| Taiwan Shin Kong |
Shin Hai and Taiwan Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Hai and Taiwan Shin
The main advantage of trading using opposite Shin Hai and Taiwan Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Hai position performs unexpectedly, Taiwan 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 Taiwan Shin will offset losses from the drop in Taiwan Shin's long position.| Shin Hai vs. Taiwan Secom Co | Shin Hai vs. Taiwan Shin Kong | Shin Hai vs. Taiwan Cogeneration Corp | Shin Hai vs. Shin Shin Natural |
| Taiwan Shin vs. Universal Microelectronics Co | Taiwan Shin vs. AVerMedia Technologies | Taiwan Shin vs. Symtek Automation Asia | Taiwan Shin vs. WiseChip 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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