Correlation Between Leofoo Development and Shin Tai

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

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

Diversification Opportunities for Leofoo Development and Shin Tai

0.55

Correlation Coefficient

Leofoo Development  Shin Tai

Very weak diversification

The 3 months correlation between Leofoo and Shin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Leofoo Development Co and Shin Tai Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Tai Industry and Leofoo 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 Leofoo Development Co are associated (or correlated) with Shin Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Tai Industry has no effect on the direction of Leofoo Development i.e., Leofoo Development and Shin Tai go up and down completely randomly.

Pair Corralation between Leofoo Development and Shin Tai

Assuming the 90 days trading horizon Leofoo Development is expected to generate 9.71 times less return on investment than Shin Tai. But when comparing it to its historical volatility, Leofoo Development Co is 2.68 times less risky than Shin Tai. It trades about 0.05 of its potential returns per unit of risk. Shin Tai Industry is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7,610  in Shin Tai Industry on December 30, 2024 and sell it today you would earn a total of  2,490  from holding Shin Tai Industry or generate 32.72% return on investment over 90 days.

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

Leofoo Development Co  vs.  Shin Tai Industry

Leofoo Development

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Leofoo Development Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Leofoo 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 Tai Industry

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Tai Industry are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shin Tai showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leofoo Development and Shin Tai

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

The idea behind Leofoo Development Co and Shin Tai Industry 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.