Correlation Between Shin Kong and APEX International

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

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

Diversification Opportunities for Shin Kong and APEX International

-0.73

Correlation Coefficient

Shin Kong  APEX International

Pay attention - limited upside

The 3 months correlation between Shin and APEX is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and APEX International Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APEX International and Shin Kong 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 Shin Kong Financial are associated (or correlated) with APEX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APEX International has no effect on the direction of Shin Kong i.e., Shin Kong and APEX International go up and down completely randomly.

Pair Corralation between Shin Kong and APEX International

Assuming the 90 days trading horizon Shin Kong Financial is expected to generate 0.36 times more return on investment than APEX International. However, Shin Kong Financial is 2.78 times less risky than APEX International. It trades about -0.02 of its potential returns per unit of risk. APEX International Financial is currently generating about -0.19 per unit of risk. If you would invest  1,195  in Shin Kong Financial on October 14, 2024 and sell it today you would lose (5.00) from holding Shin Kong Financial or give up 0.42% of portfolio value over 90 days.

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

Shin Kong Financial  vs.  APEX International Financial

Shin Kong Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Kong Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shin Kong is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

APEX International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APEX International Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Shin Kong and APEX International

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

The idea behind Shin Kong Financial and APEX International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.