Correlation Between Bin Chuan and Shin Zu

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

By analyzing existing cross correlation between Bin Chuan Enterprise and Shin Zu Shing, you can compare the effects of market volatilities on Bin Chuan and Shin Zu 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 Bin Chuan with a short position of Shin Zu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bin Chuan and Shin Zu.

Diversification Opportunities for Bin Chuan and Shin Zu

0.07

Correlation Coefficient

Bin Chuan  Shin Zu

Significant diversification

The 3 months correlation between Bin and Shin is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and Shin Zu Shing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Zu Shing and Bin Chuan 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 Bin Chuan Enterprise are associated (or correlated) with Shin Zu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Zu Shing has no effect on the direction of Bin Chuan i.e., Bin Chuan and Shin Zu go up and down completely randomly.

Pair Corralation between Bin Chuan and Shin Zu

Assuming the 90 days trading horizon Bin Chuan Enterprise is expected to generate 1.77 times more return on investment than Shin Zu. However, Bin Chuan is 1.77 times more volatile than Shin Zu Shing. It trades about 0.24 of its potential returns per unit of risk. Shin Zu Shing is currently generating about -0.06 per unit of risk. If you would invest  4,495  in Bin Chuan Enterprise on September 18, 2024 and sell it today you would earn a total of  1,215  from holding Bin Chuan Enterprise or generate 27.03% return on investment over 90 days.

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

Bin Chuan Enterprise  vs.  Shin Zu Shing

Bin Chuan Enterprise

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bin Chuan Enterprise are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bin Chuan showed solid returns over the last few months and may actually be approaching a breakup point.

Shin Zu Shing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shin Zu Shing 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.

Pair Trading with Bin Chuan and Shin Zu

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

The idea behind Bin Chuan Enterprise and Shin Zu Shing 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.