Correlation Between Shinkong Synthetic and Lealea Enterprise

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

Diversification Opportunities for Shinkong Synthetic and Lealea Enterprise

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Shinkong and Lealea is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Synthetic Fiber and Lealea Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lealea Enterprise 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 Lealea Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lealea Enterprise has no effect on the direction of Shinkong Synthetic i.e., Shinkong Synthetic and Lealea Enterprise go up and down completely randomly.

Pair Corralation between Shinkong Synthetic and Lealea Enterprise

Assuming the 90 days trading horizon Shinkong Synthetic Fiber is expected to under-perform the Lealea Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Shinkong Synthetic Fiber is 1.19 times less risky than Lealea Enterprise. The stock trades about -0.06 of its potential returns per unit of risk. The Lealea Enterprise Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  926.00  in Lealea Enterprise Co on September 17, 2024 and sell it today you would lose (8.00) from holding Lealea Enterprise Co or give up 0.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Shinkong Synthetic Fiber  vs.  Lealea Enterprise Co

 Performance 
       Timeline  
Shinkong Synthetic Fiber 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fairly stable basic indicators, Shinkong Synthetic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Lealea Enterprise 

Risk-Adjusted Performance

0 of 100

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

Shinkong Synthetic and Lealea Enterprise Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shinkong Synthetic and Lealea Enterprise

The main advantage of trading using opposite Shinkong Synthetic and Lealea Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinkong Synthetic position performs unexpectedly, Lealea 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 Lealea Enterprise will offset losses from the drop in Lealea Enterprise's long position.
The idea behind Shinkong Synthetic Fiber and Lealea 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.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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