Correlation Between Taiwan Hon and Shinih Enterprise

Can any of the company-specific risk be diversified away by investing in both Taiwan Hon and Shinih Enterprise 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 Hon and Shinih Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taiwan Hon Chuan and Shinih Enterprise Co, you can compare the effects of market volatilities on Taiwan Hon and Shinih Enterprise 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 Hon with a short position of Shinih Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Hon and Shinih Enterprise.

Diversification Opportunities for Taiwan Hon and Shinih Enterprise

-0.31

Correlation Coefficient

Taiwan Hon  Shinih Enterprise

Very good diversification

The 3 months correlation between Taiwan and Shinih is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Hon Chuan and Shinih Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinih Enterprise and Taiwan Hon 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 Hon Chuan are associated (or correlated) with Shinih Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinih Enterprise has no effect on the direction of Taiwan Hon i.e., Taiwan Hon and Shinih Enterprise go up and down completely randomly.

Pair Corralation between Taiwan Hon and Shinih Enterprise

Assuming the 90 days trading horizon Taiwan Hon Chuan is expected to generate 1.17 times more return on investment than Shinih Enterprise. However, Taiwan Hon is 1.17 times more volatile than Shinih Enterprise Co. It trades about 0.06 of its potential returns per unit of risk. Shinih Enterprise Co is currently generating about 0.01 per unit of risk. If you would invest  12,250  in Taiwan Hon Chuan on September 4, 2024 and sell it today you would earn a total of  2,600  from holding Taiwan Hon Chuan or generate 21.22% return on investment over 90 days.

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

Taiwan Hon Chuan  vs.  Shinih Enterprise Co

Taiwan Hon Chuan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Hon Chuan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan Hon is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shinih Enterprise

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinih Enterprise Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shinih Enterprise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Taiwan Hon and Shinih Enterprise

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

The idea behind Taiwan Hon Chuan and Shinih Enterprise Co 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.