Correlation Between Wistron Corp and Shin Kong

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

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

Diversification Opportunities for Wistron Corp and Shin Kong

0.08

Correlation Coefficient

Wistron Corp  Shin Kong

Significant diversification

The 3 months correlation between Wistron and Shin is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Corp 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 Wistron Corp 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 Wistron Corp 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 Wistron Corp i.e., Wistron Corp and Shin Kong go up and down completely randomly.

Pair Corralation between Wistron Corp and Shin Kong

Assuming the 90 days trading horizon Wistron Corp is expected to under-perform the Shin Kong. In addition to that, Wistron Corp is 6.46 times more volatile than Shin Kong Financial. It trades about -0.01 of its total potential returns per unit of risk. Shin Kong Financial is currently generating about 0.4 per unit of volatility. If you would invest  3,540  in Shin Kong Financial on December 30, 2024 and sell it today you would earn a total of  315.00  from holding Shin Kong Financial or generate 8.9% return on investment over 90 days.

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

Wistron Corp  vs.  Shin Kong Financial

Wistron Corp

Risk-Adjusted Performance

Very Weak

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

Shin Kong Financial

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Kong Financial are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Shin Kong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wistron Corp and Shin Kong

The main advantage of trading using opposite Wistron Corp and Shin Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Corp 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 Wistron Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.