Correlation Between Shinkong Synthetic and Reward Wool

Can any of the company-specific risk be diversified away by investing in both Shinkong Synthetic and Reward Wool 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 Shinkong Synthetic and Reward Wool into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shinkong Synthetic Fiber and Reward Wool Industry, you can compare the effects of market volatilities on Shinkong Synthetic and Reward Wool 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 Shinkong Synthetic with a short position of Reward Wool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Synthetic and Reward Wool.

Diversification Opportunities for Shinkong Synthetic and Reward Wool

0.25

Correlation Coefficient

Shinkong Synthetic  Reward Wool

Modest diversification

The 3 months correlation between Shinkong and Reward is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Synthetic Fiber and Reward Wool Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reward Wool Industry and Shinkong Synthetic 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 Shinkong Synthetic Fiber are associated (or correlated) with Reward Wool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reward Wool Industry has no effect on the direction of Shinkong Synthetic i.e., Shinkong Synthetic and Reward Wool go up and down completely randomly.

Pair Corralation between Shinkong Synthetic and Reward Wool

Assuming the 90 days trading horizon Shinkong Synthetic Fiber is expected to under-perform the Reward Wool. But the stock apears to be less risky and, when comparing its historical volatility, Shinkong Synthetic Fiber is 2.56 times less risky than Reward Wool. The stock trades about -0.58 of its potential returns per unit of risk. The Reward Wool Industry is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,755  in Reward Wool Industry on October 6, 2024 and sell it today you would lose (60.00) from holding Reward Wool Industry or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Shinkong Synthetic Fiber  vs.  Reward Wool Industry

Shinkong Synthetic Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinkong Synthetic Fiber 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.

Reward Wool Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reward Wool Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Pair Trading with Shinkong Synthetic and Reward Wool

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

The idea behind Shinkong Synthetic Fiber and Reward Wool Industry 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.