Correlation Between Shinkong Textile and Tex Ray

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

Diversification Opportunities for Shinkong Textile and Tex Ray

-0.36

Correlation Coefficient

Shinkong Textile  Tex Ray

Very good diversification

The 3 months correlation between Shinkong and Tex is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Textile Co and Tex Ray Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Ray Industrial 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 Tex Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Ray Industrial has no effect on the direction of Shinkong Textile i.e., Shinkong Textile and Tex Ray go up and down completely randomly.

Pair Corralation between Shinkong Textile and Tex Ray

Assuming the 90 days trading horizon Shinkong Textile Co is expected to under-perform the Tex Ray. But the stock apears to be less risky and, when comparing its historical volatility, Shinkong Textile Co is 1.02 times less risky than Tex Ray. The stock trades about -0.09 of its potential returns per unit of risk. The Tex Ray Industrial Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,035  in Tex Ray Industrial Co on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Tex Ray Industrial Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Shinkong Textile Co  vs.  Tex Ray Industrial Co

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.

Tex Ray Industrial

Risk-Adjusted Performance

0 of 100

Weak

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

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

The idea behind Shinkong Textile Co and Tex Ray Industrial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.