Correlation Between Shinkong Insurance and Cheng Fwa

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

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

Diversification Opportunities for Shinkong Insurance and Cheng Fwa

-0.05

Correlation Coefficient

Shinkong Insurance  Cheng Fwa

Good diversification

The 3 months correlation between Shinkong and Cheng is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Cheng Fwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Fwa Industrial and Shinkong Insurance 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 Shinkong Insurance Co are associated (or correlated) with Cheng Fwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Fwa Industrial has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Cheng Fwa go up and down completely randomly.

Pair Corralation between Shinkong Insurance and Cheng Fwa

Assuming the 90 days trading horizon Shinkong Insurance Co is expected to generate 0.52 times more return on investment than Cheng Fwa. However, Shinkong Insurance Co is 1.92 times less risky than Cheng Fwa. It trades about 0.04 of its potential returns per unit of risk. Cheng Fwa Industrial is currently generating about 0.0 per unit of risk. If you would invest  10,250  in Shinkong Insurance Co on October 11, 2024 and sell it today you would earn a total of  100.00  from holding Shinkong Insurance Co or generate 0.98% return on investment over 90 days.

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

Shinkong Insurance Co  vs.  Cheng Fwa Industrial

Shinkong Insurance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shinkong Insurance Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shinkong Insurance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cheng Fwa Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheng Fwa Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cheng Fwa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shinkong Insurance and Cheng Fwa

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

The idea behind Shinkong Insurance Co and Cheng Fwa 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.