Correlation Between Yeong Guan and Shin Zu

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

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

Diversification Opportunities for Yeong Guan and Shin Zu

0.59

Correlation Coefficient

Yeong Guan  Shin Zu

Very weak diversification

The 3 months correlation between Yeong and Shin is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Yeong Guan Energy 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 Yeong Guan 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 Yeong Guan Energy 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 Yeong Guan i.e., Yeong Guan and Shin Zu go up and down completely randomly.

Pair Corralation between Yeong Guan and Shin Zu

Assuming the 90 days trading horizon Yeong Guan Energy is expected to under-perform the Shin Zu. But the stock apears to be less risky and, when comparing its historical volatility, Yeong Guan Energy is 1.93 times less risky than Shin Zu. The stock trades about -0.19 of its potential returns per unit of risk. The Shin Zu Shing is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  20,050  in Shin Zu Shing on September 18, 2024 and sell it today you would lose (2,350) from holding Shin Zu Shing or give up 11.72% of portfolio value over 90 days.

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

Yeong Guan Energy  vs.  Shin Zu Shing

Yeong Guan Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yeong Guan Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 Yeong Guan and Shin Zu

The main advantage of trading using opposite Yeong Guan and Shin Zu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yeong Guan 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 Yeong Guan Energy 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.