Correlation Between Shin Zu and Global Unichip

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

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

Diversification Opportunities for Shin Zu and Global Unichip

-0.15

Correlation Coefficient

Shin Zu  Global Unichip

Good diversification

The 3 months correlation between Shin and Global is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shin Zu Shing and Global Unichip Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Unichip Corp and Shin Zu 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 Zu Shing are associated (or correlated) with Global Unichip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Unichip Corp has no effect on the direction of Shin Zu i.e., Shin Zu and Global Unichip go up and down completely randomly.

Pair Corralation between Shin Zu and Global Unichip

Assuming the 90 days trading horizon Shin Zu Shing is expected to generate 1.12 times more return on investment than Global Unichip. However, Shin Zu is 1.12 times more volatile than Global Unichip Corp. It trades about 0.08 of its potential returns per unit of risk. Global Unichip Corp is currently generating about 0.06 per unit of risk. If you would invest  19,250  in Shin Zu Shing on September 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Shin Zu Shing or generate 5.19% return on investment over 90 days.

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

Shin Zu Shing  vs.  Global Unichip Corp

Shin Zu Shing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global Unichip Corp

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Shin Zu and Global Unichip

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

The idea behind Shin Zu Shing and Global Unichip Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.