Correlation Between Shinkong Textile and Nien Hsing

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

Diversification Opportunities for Shinkong Textile and Nien Hsing

-0.42

Correlation Coefficient

Shinkong Textile  Nien Hsing

Very good diversification

The 3 months correlation between Shinkong and Nien is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Textile Co and Nien Hsing Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Hsing Textile 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 Nien Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Hsing Textile has no effect on the direction of Shinkong Textile i.e., Shinkong Textile and Nien Hsing go up and down completely randomly.

Pair Corralation between Shinkong Textile and Nien Hsing

Assuming the 90 days trading horizon Shinkong Textile Co is expected to generate 1.3 times more return on investment than Nien Hsing. However, Shinkong Textile is 1.3 times more volatile than Nien Hsing Textile. It trades about 0.02 of its potential returns per unit of risk. Nien Hsing Textile is currently generating about -0.01 per unit of risk. If you would invest  3,995  in Shinkong Textile Co on September 23, 2024 and sell it today you would earn a total of  400.00  from holding Shinkong Textile Co or generate 10.01% return on investment over 90 days.

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

Shinkong Textile Co  vs.  Nien Hsing Textile

Shinkong Textile

Risk-Adjusted Performance

0 of 100

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 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.

Nien Hsing Textile

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind Shinkong Textile Co and Nien Hsing Textile 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.