Correlation Between Shin Tai and Sun Sea

Can any of the company-specific risk be diversified away by investing in both Shin Tai and Sun Sea 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 Sun Sea 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 Sun Sea Construction, you can compare the effects of market volatilities on Shin Tai and Sun Sea 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 Sun Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Sun Sea.

Diversification Opportunities for Shin Tai and Sun Sea

-0.47

Correlation Coefficient

Shin Tai  Sun Sea

Very good diversification

The 3 months correlation between Shin and Sun is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Sun Sea Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Sea Construction 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 Sun Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Sea Construction has no effect on the direction of Shin Tai i.e., Shin Tai and Sun Sea go up and down completely randomly.

Pair Corralation between Shin Tai and Sun Sea

Assuming the 90 days trading horizon Shin Tai Industry is expected to under-perform the Sun Sea. In addition to that, Shin Tai is 2.8 times more volatile than Sun Sea Construction. It trades about -0.69 of its total potential returns per unit of risk. Sun Sea Construction is currently generating about 0.27 per unit of volatility. If you would invest  1,800  in Sun Sea Construction on October 6, 2024 and sell it today you would earn a total of  135.00  from holding Sun Sea Construction or generate 7.5% return on investment over 90 days.

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

Shin Tai Industry  vs.  Sun Sea Construction

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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sun Sea Construction

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Sea Construction are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sun Sea 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 Sun Sea

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

The idea behind Shin Tai Industry and Sun Sea Construction 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.