Correlation Between Sakura Development and Shin Ruenn

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

By analyzing existing cross correlation between Sakura Development Co and Shin Ruenn Development, you can compare the effects of market volatilities on Sakura Development and Shin Ruenn 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 Sakura Development with a short position of Shin Ruenn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sakura Development and Shin Ruenn.

Diversification Opportunities for Sakura Development and Shin Ruenn

0.33

Correlation Coefficient

Sakura Development  Shin Ruenn

Weak diversification

The 3 months correlation between Sakura and Shin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sakura Development Co and Shin Ruenn Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Ruenn Development and Sakura Development 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 Sakura Development Co are associated (or correlated) with Shin Ruenn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Ruenn Development has no effect on the direction of Sakura Development i.e., Sakura Development and Shin Ruenn go up and down completely randomly.

Pair Corralation between Sakura Development and Shin Ruenn

Assuming the 90 days trading horizon Sakura Development Co is expected to under-perform the Shin Ruenn. In addition to that, Sakura Development is 1.38 times more volatile than Shin Ruenn Development. It trades about 0.0 of its total potential returns per unit of risk. Shin Ruenn Development is currently generating about 0.06 per unit of volatility. If you would invest  5,960  in Shin Ruenn Development on September 20, 2024 and sell it today you would earn a total of  140.00  from holding Shin Ruenn Development or generate 2.35% return on investment over 90 days.

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

Sakura Development Co  vs.  Shin Ruenn Development

Sakura Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sakura Development Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sakura Development is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shin Ruenn Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shin Ruenn Development 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 Sakura Development and Shin Ruenn

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

The idea behind Sakura Development Co and Shin Ruenn Development 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.