Correlation Between Shin Tai and Fwusow Industry

Can any of the company-specific risk be diversified away by investing in both Shin Tai and Fwusow 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 Shin Tai and Fwusow Industry 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 Fwusow Industry Co, you can compare the effects of market volatilities on Shin Tai and Fwusow 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 Shin Tai with a short position of Fwusow Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Fwusow Industry.

Diversification Opportunities for Shin Tai and Fwusow Industry

0.88

Correlation Coefficient

Shin Tai  Fwusow Industry

Very poor diversification

The 3 months correlation between Shin and Fwusow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Fwusow Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fwusow Industry 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 Fwusow Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fwusow Industry has no effect on the direction of Shin Tai i.e., Shin Tai and Fwusow Industry go up and down completely randomly.

Pair Corralation between Shin Tai and Fwusow Industry

Assuming the 90 days trading horizon Shin Tai Industry is expected to under-perform the Fwusow Industry. In addition to that, Shin Tai is 4.71 times more volatile than Fwusow Industry Co. It trades about -0.58 of its total potential returns per unit of risk. Fwusow Industry Co is currently generating about -0.48 per unit of volatility. If you would invest  1,685  in Fwusow Industry Co on September 23, 2024 and sell it today you would lose (135.00) from holding Fwusow Industry Co or give up 8.01% of portfolio value over 90 days.

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

Shin Tai Industry  vs.  Fwusow Industry Co

Shin Tai Industry

Risk-Adjusted Performance

0 of 100

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.

Fwusow Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fwusow Industry Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Shin Tai and Fwusow Industry

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

The idea behind Shin Tai Industry and Fwusow Industry 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.

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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 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.