Correlation Between Shinkong Textile and Shinkong Synthetic

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

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

Diversification Opportunities for Shinkong Textile and Shinkong Synthetic

0.75

Correlation Coefficient

Shinkong Textile  Shinkong Synthetic

Poor diversification

The 3 months correlation between Shinkong and Shinkong is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Textile Co and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and Shinkong Textile 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 Textile Co are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Shinkong Textile i.e., Shinkong Textile and Shinkong Synthetic go up and down completely randomly.

Pair Corralation between Shinkong Textile and Shinkong Synthetic

Assuming the 90 days trading horizon Shinkong Textile Co is expected to generate 1.58 times more return on investment than Shinkong Synthetic. However, Shinkong Textile is 1.58 times more volatile than Shinkong Synthetic Fiber. It trades about 0.13 of its potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about 0.19 per unit of risk. If you would invest  4,195  in Shinkong Textile Co on December 10, 2024 and sell it today you would earn a total of  115.00  from holding Shinkong Textile Co or generate 2.74% return on investment over 90 days.

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

Shinkong Textile Co  vs.  Shinkong Synthetic Fiber

Shinkong Textile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shinkong Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shinkong Textile 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 Fiber

Risk-Adjusted Performance

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.

Pair Trading with Shinkong Textile and Shinkong Synthetic

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

The idea behind Shinkong Textile Co and Shinkong Synthetic Fiber 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.