Correlation Between Shin Kong and Dimerco Express

Can any of the company-specific risk be diversified away by investing in both Shin Kong and Dimerco Express 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 Kong and Dimerco Express into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shin Kong Financial and Dimerco Express, you can compare the effects of market volatilities on Shin Kong and Dimerco Express 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 Kong with a short position of Dimerco Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and Dimerco Express.

Diversification Opportunities for Shin Kong and Dimerco Express

-0.11

Correlation Coefficient

Shin Kong  Dimerco Express

Good diversification

The 3 months correlation between Shin and Dimerco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Dimerco Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimerco Express and Shin Kong 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 Kong Financial are associated (or correlated) with Dimerco Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimerco Express has no effect on the direction of Shin Kong i.e., Shin Kong and Dimerco Express go up and down completely randomly.

Pair Corralation between Shin Kong and Dimerco Express

Assuming the 90 days trading horizon Shin Kong Financial is expected to under-perform the Dimerco Express. But the stock apears to be less risky and, when comparing its historical volatility, Shin Kong Financial is 1.25 times less risky than Dimerco Express. The stock trades about -0.03 of its potential returns per unit of risk. The Dimerco Express is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,020  in Dimerco Express on February 4, 2024 and sell it today you would earn a total of  1,400  from holding Dimerco Express or generate 17.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Shin Kong Financial  vs.  Dimerco Express

Shin Kong Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Kong Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shin Kong is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dimerco Express

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimerco Express are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Dimerco Express may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Shin Kong and Dimerco Express

The main advantage of trading using opposite Shin Kong and Dimerco Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, Dimerco Express 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 Dimerco Express will offset losses from the drop in Dimerco Express' long position.

The idea behind Shin Kong Financial and Dimerco Express pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.