Correlation Between Shinkong Insurance and Acer E

Can any of the company-specific risk be diversified away by investing in both Shinkong Insurance and Acer E 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 Acer E 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 Acer E Enabling Service, you can compare the effects of market volatilities on Shinkong Insurance and Acer E 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 Acer E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinkong Insurance and Acer E.

Diversification Opportunities for Shinkong Insurance and Acer E

0.42

Correlation Coefficient

Shinkong Insurance  Acer E

Very weak diversification

The 3 months correlation between Shinkong and Acer is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Acer E Enabling Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer E Enabling 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 Acer E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer E Enabling has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Acer E go up and down completely randomly.

Pair Corralation between Shinkong Insurance and Acer E

Assuming the 90 days trading horizon Shinkong Insurance is expected to generate 13.68 times less return on investment than Acer E. But when comparing it to its historical volatility, Shinkong Insurance Co is 2.41 times less risky than Acer E. It trades about 0.02 of its potential returns per unit of risk. Acer E Enabling Service is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  24,150  in Acer E Enabling Service on December 2, 2024 and sell it today you would earn a total of  3,350  from holding Acer E Enabling Service or generate 13.87% return on investment over 90 days.

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

Shinkong Insurance Co  vs.  Acer E Enabling Service

Shinkong Insurance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinkong Insurance Co are ranked lower than 1 (%) 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.

Acer E Enabling

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acer E Enabling Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acer E showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinkong Insurance and Acer E

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

The idea behind Shinkong Insurance Co and Acer E Enabling Service 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.