Correlation Between Shihlin Electric and Airtac International

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

By analyzing existing cross correlation between Shihlin Electric Engineering and Airtac International Group, you can compare the effects of market volatilities on Shihlin Electric and Airtac International 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 Shihlin Electric with a short position of Airtac International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shihlin Electric and Airtac International.

Diversification Opportunities for Shihlin Electric and Airtac International

-0.2

Correlation Coefficient

Shihlin Electric  Airtac International

Good diversification

The 3 months correlation between Shihlin and Airtac is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Shihlin Electric Engineering and Airtac International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtac International and Shihlin Electric 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 Shihlin Electric Engineering are associated (or correlated) with Airtac International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtac International has no effect on the direction of Shihlin Electric i.e., Shihlin Electric and Airtac International go up and down completely randomly.

Pair Corralation between Shihlin Electric and Airtac International

Assuming the 90 days trading horizon Shihlin Electric is expected to generate 2.25 times less return on investment than Airtac International. In addition to that, Shihlin Electric is 1.29 times more volatile than Airtac International Group. It trades about 0.05 of its total potential returns per unit of risk. Airtac International Group is currently generating about 0.16 per unit of volatility. If you would invest  86,200  in Airtac International Group on December 5, 2024 and sell it today you would earn a total of  6,300  from holding Airtac International Group or generate 7.31% return on investment over 90 days.

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

Shihlin Electric Engineering  vs.  Airtac International Group

Shihlin Electric Eng

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shihlin Electric Engineering 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.

Airtac International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airtac International Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Airtac International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shihlin Electric and Airtac International

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

The idea behind Shihlin Electric Engineering and Airtac International Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.