Correlation Between Shinkong Synthetic and Yong Shun

Can any of the company-specific risk be diversified away by investing in both Shinkong Synthetic and Yong Shun 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 Yong Shun 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 Yong Shun Chemical, you can compare the effects of market volatilities on Shinkong Synthetic and Yong Shun 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 Yong Shun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Synthetic and Yong Shun.

Diversification Opportunities for Shinkong Synthetic and Yong Shun

0.33

Correlation Coefficient

Shinkong Synthetic  Yong Shun

Weak diversification

The 3 months correlation between Shinkong and Yong is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Synthetic Fiber and Yong Shun Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yong Shun Chemical 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 Yong Shun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yong Shun Chemical has no effect on the direction of Shinkong Synthetic i.e., Shinkong Synthetic and Yong Shun go up and down completely randomly.

Pair Corralation between Shinkong Synthetic and Yong Shun

Assuming the 90 days trading horizon Shinkong Synthetic Fiber is expected to generate 0.37 times more return on investment than Yong Shun. However, Shinkong Synthetic Fiber is 2.7 times less risky than Yong Shun. It trades about 0.04 of its potential returns per unit of risk. Yong Shun Chemical is currently generating about 0.0 per unit of risk. If you would invest  1,565  in Shinkong Synthetic Fiber on September 12, 2024 and sell it today you would earn a total of  30.00  from holding Shinkong Synthetic Fiber or generate 1.92% return on investment over 90 days.

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

Shinkong Synthetic Fiber  vs.  Yong Shun Chemical

Shinkong Synthetic Fiber

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shinkong Synthetic Fiber are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Yong Shun Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yong Shun Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yong Shun 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 Shinkong Synthetic and Yong Shun

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

The idea behind Shinkong Synthetic Fiber and Yong Shun Chemical 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.