Correlation Between Shinih Enterprise and Taiwan Hon
Can any of the company-specific risk be diversified away by investing in both Shinih Enterprise and Taiwan Hon 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 Taiwan Hon 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 Taiwan Hon Chuan, you can compare the effects of market volatilities on Shinih Enterprise and Taiwan Hon 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 Taiwan Hon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinih Enterprise and Taiwan Hon.
Diversification Opportunities for Shinih Enterprise and Taiwan Hon
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shinih and Taiwan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Shinih Enterprise Co and Taiwan Hon Chuan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Hon Chuan 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 Taiwan Hon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Hon Chuan has no effect on the direction of Shinih Enterprise i.e., Shinih Enterprise and Taiwan Hon go up and down completely randomly.
Pair Corralation between Shinih Enterprise and Taiwan Hon
Assuming the 90 days trading horizon Shinih Enterprise is expected to generate 16.0 times less return on investment than Taiwan Hon. But when comparing it to its historical volatility, Shinih Enterprise Co is 1.26 times less risky than Taiwan Hon. It trades about 0.01 of its potential returns per unit of risk. Taiwan Hon Chuan is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,420 in Taiwan Hon Chuan on September 3, 2024 and sell it today you would earn a total of 6,280 from holding Taiwan Hon Chuan or generate 74.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinih Enterprise Co vs. Taiwan Hon Chuan
Performance |
| Timeline |
| Shinih Enterprise |
| Taiwan Hon Chuan |
Shinih Enterprise and Taiwan Hon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinih Enterprise and Taiwan Hon
The main advantage of trading using opposite Shinih Enterprise and Taiwan Hon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinih Enterprise position performs unexpectedly, Taiwan Hon 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 Hon will offset losses from the drop in Taiwan Hon'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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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