Correlation Between EnTie Commercial and Shin Kong

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

By analyzing existing cross correlation between EnTie Commercial Bank and Shin Kong Financial, you can compare the effects of market volatilities on EnTie Commercial and Shin Kong 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 EnTie Commercial with a short position of Shin Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnTie Commercial and Shin Kong.

Diversification Opportunities for EnTie Commercial and Shin Kong

-0.18

Correlation Coefficient

EnTie Commercial  Shin Kong

Good diversification

The 3 months correlation between EnTie and Shin is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding EnTie Commercial Bank and Shin Kong Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Kong Financial and EnTie Commercial 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 EnTie Commercial Bank are associated (or correlated) with Shin Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Kong Financial has no effect on the direction of EnTie Commercial i.e., EnTie Commercial and Shin Kong go up and down completely randomly.

Pair Corralation between EnTie Commercial and Shin Kong

Assuming the 90 days trading horizon EnTie Commercial Bank is expected to under-perform the Shin Kong. In addition to that, EnTie Commercial is 1.82 times more volatile than Shin Kong Financial. It trades about -0.05 of its total potential returns per unit of risk. Shin Kong Financial is currently generating about 0.14 per unit of volatility. If you would invest  1,140  in Shin Kong Financial on October 6, 2024 and sell it today you would earn a total of  50.00  from holding Shin Kong Financial or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

EnTie Commercial Bank  vs.  Shin Kong Financial

EnTie Commercial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shin Kong Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EnTie Commercial and Shin Kong

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

The idea behind EnTie Commercial Bank and Shin Kong Financial 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.