Correlation Between Shin Tai and Taisun Enterprise

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

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

Diversification Opportunities for Shin Tai and Taisun Enterprise

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Correlation Coefficient

Shin Tai  Taisun Enterprise

Pay attention - limited upside

The 3 months correlation between Shin and Taisun is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Taisun Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taisun Enterprise and Shin Tai 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 Tai Industry are associated (or correlated) with Taisun Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taisun Enterprise has no effect on the direction of Shin Tai i.e., Shin Tai and Taisun Enterprise go up and down completely randomly.

Pair Corralation between Shin Tai and Taisun Enterprise

Assuming the 90 days trading horizon Shin Tai Industry is expected to generate 1.27 times more return on investment than Taisun Enterprise. However, Shin Tai is 1.27 times more volatile than Taisun Enterprise Co. It trades about 0.04 of its potential returns per unit of risk. Taisun Enterprise Co is currently generating about -0.06 per unit of risk. If you would invest  6,820  in Shin Tai Industry on September 22, 2024 and sell it today you would earn a total of  2,410  from holding Shin Tai Industry or generate 35.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Shin Tai Industry  vs.  Taisun Enterprise Co

Shin Tai Industry

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Shin Tai Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Taisun Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taisun Enterprise Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taisun 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 Shin Tai and Taisun Enterprise

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

The idea behind Shin Tai Industry and Taisun 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.