Correlation Between Aerospace Industrial and Shin Zu

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

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

Diversification Opportunities for Aerospace Industrial and Shin Zu

0.11

Correlation Coefficient

Aerospace Industrial  Shin Zu

Average diversification

The 3 months correlation between Aerospace and Shin is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aerospace Industrial Developme 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 Aerospace Industrial 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 Aerospace Industrial Development 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 Aerospace Industrial i.e., Aerospace Industrial and Shin Zu go up and down completely randomly.

Pair Corralation between Aerospace Industrial and Shin Zu

Assuming the 90 days trading horizon Aerospace Industrial Development is expected to under-perform the Shin Zu. But the stock apears to be less risky and, when comparing its historical volatility, Aerospace Industrial Development is 3.03 times less risky than Shin Zu. The stock trades about -0.06 of its potential returns per unit of risk. The Shin Zu Shing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  19,250  in Shin Zu Shing on September 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Shin Zu Shing or generate 5.19% return on investment over 90 days.

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

Aerospace Industrial Developme  vs.  Shin Zu Shing

Aerospace Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerospace Industrial Development 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.

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 fairly stable basic indicators, Shin Zu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aerospace Industrial and Shin Zu

The main advantage of trading using opposite Aerospace Industrial and Shin Zu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerospace Industrial 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 Aerospace Industrial Development 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.