Correlation Between Shinih Enterprise and Merida Industry
Can any of the company-specific risk be diversified away by investing in both Shinih Enterprise and Merida Industry 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 Shinih Enterprise and Merida Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinih Enterprise Co and Merida Industry Co, you can compare the effects of market volatilities on Shinih Enterprise and Merida Industry 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 Shinih Enterprise with a short position of Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinih Enterprise and Merida Industry.
Diversification Opportunities for Shinih Enterprise and Merida Industry
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinih and Merida is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shinih Enterprise Co and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry and Shinih Enterprise 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 Shinih Enterprise Co are associated (or correlated) with Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of Shinih Enterprise i.e., Shinih Enterprise and Merida Industry go up and down completely randomly.
Pair Corralation between Shinih Enterprise and Merida Industry
Assuming the 90 days trading horizon Shinih Enterprise is expected to generate 1.25 times less return on investment than Merida Industry. But when comparing it to its historical volatility, Shinih Enterprise Co is 1.81 times less risky than Merida Industry. It trades about 0.01 of its potential returns per unit of risk. Merida Industry Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 17,120 in Merida Industry Co on September 3, 2024 and sell it today you would lose (1,120) from holding Merida Industry Co or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Shinih Enterprise Co vs. Merida Industry Co
Performance |
| Timeline |
| Shinih Enterprise |
| Merida Industry |
Shinih Enterprise and Merida Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinih Enterprise and Merida Industry
The main advantage of trading using opposite Shinih Enterprise and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinih Enterprise position performs unexpectedly, Merida Industry 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 Merida Industry will offset losses from the drop in Merida Industry's long position.| Shinih Enterprise vs. Ton Yi Industrial | Shinih Enterprise vs. Super Dragon Technology | Shinih Enterprise vs. Min Aik Technology | Shinih Enterprise vs. Hung Sheng Construction |
| Merida Industry vs. Giant Manufacturing Co | Merida Industry vs. Cheng Shin Rubber | Merida Industry vs. Feng Tay Enterprises | Merida Industry vs. President Chain Store |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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