Correlation Between Shin Zu and Lemtech Holdings

Can any of the company-specific risk be diversified away by investing in both Shin Zu and Lemtech Holdings 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 Lemtech Holdings 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 Lemtech Holdings Co, you can compare the effects of market volatilities on Shin Zu and Lemtech Holdings 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 Lemtech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Zu and Lemtech Holdings.

Diversification Opportunities for Shin Zu and Lemtech Holdings

-0.62

Correlation Coefficient

Shin Zu  Lemtech Holdings

Excellent diversification

The 3 months correlation between Shin and Lemtech is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shin Zu Shing and Lemtech Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lemtech Holdings 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 Lemtech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lemtech Holdings has no effect on the direction of Shin Zu i.e., Shin Zu and Lemtech Holdings go up and down completely randomly.

Pair Corralation between Shin Zu and Lemtech Holdings

Assuming the 90 days trading horizon Shin Zu Shing is expected to generate 0.9 times more return on investment than Lemtech Holdings. However, Shin Zu Shing is 1.11 times less risky than Lemtech Holdings. It trades about 0.11 of its potential returns per unit of risk. Lemtech Holdings Co is currently generating about -0.15 per unit of risk. If you would invest  20,450  in Shin Zu Shing on December 29, 2024 and sell it today you would earn a total of  4,000  from holding Shin Zu Shing or generate 19.56% return on investment over 90 days.

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

Shin Zu Shing  vs.  Lemtech Holdings Co

Shin Zu Shing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Zu Shing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shin Zu showed solid returns over the last few months and may actually be approaching a breakup point.

Lemtech Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Shin Zu and Lemtech Holdings

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

The idea behind Shin Zu Shing and Lemtech Holdings Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.