Correlation Between Cheng Shin and Cayman Engley

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

By analyzing existing cross correlation between Cheng Shin Rubber and Cayman Engley Industrial, you can compare the effects of market volatilities on Cheng Shin and Cayman Engley 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 Cheng Shin with a short position of Cayman Engley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and Cayman Engley.

Diversification Opportunities for Cheng Shin and Cayman Engley

-0.17

Correlation Coefficient

Cheng Shin  Cayman Engley

Good diversification

The 3 months correlation between Cheng and Cayman is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and Cayman Engley Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayman Engley Industrial and Cheng Shin 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 Cheng Shin Rubber are associated (or correlated) with Cayman Engley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayman Engley Industrial has no effect on the direction of Cheng Shin i.e., Cheng Shin and Cayman Engley go up and down completely randomly.

Pair Corralation between Cheng Shin and Cayman Engley

Assuming the 90 days trading horizon Cheng Shin Rubber is expected to generate 0.99 times more return on investment than Cayman Engley. However, Cheng Shin Rubber is 1.01 times less risky than Cayman Engley. It trades about 0.05 of its potential returns per unit of risk. Cayman Engley Industrial is currently generating about -0.05 per unit of risk. If you would invest  3,410  in Cheng Shin Rubber on September 23, 2024 and sell it today you would earn a total of  1,545  from holding Cheng Shin Rubber or generate 45.31% return on investment over 90 days.

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

Cheng Shin Rubber  vs.  Cayman Engley Industrial

Cheng Shin Rubber

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cheng Shin Rubber are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Cheng Shin is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cayman Engley Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cayman Engley Industrial 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.

Pair Trading with Cheng Shin and Cayman Engley

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

The idea behind Cheng Shin Rubber and Cayman Engley Industrial 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.