Correlation Between Ma Kuang and Shih Kuen
Can any of the company-specific risk be diversified away by investing in both Ma Kuang and Shih Kuen 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 Ma Kuang and Shih Kuen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ma Kuang Healthcare and Shih Kuen Plastics, you can compare the effects of market volatilities on Ma Kuang and Shih Kuen 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 Ma Kuang with a short position of Shih Kuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ma Kuang and Shih Kuen.
Diversification Opportunities for Ma Kuang and Shih Kuen
Very weak diversification
The 3 months correlation between 4139 and Shih is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare and Shih Kuen Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Kuen Plastics and Ma Kuang 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 Ma Kuang Healthcare are associated (or correlated) with Shih Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Kuen Plastics has no effect on the direction of Ma Kuang i.e., Ma Kuang and Shih Kuen go up and down completely randomly.
Pair Corralation between Ma Kuang and Shih Kuen
Assuming the 90 days trading horizon Ma Kuang Healthcare is expected to under-perform the Shih Kuen. In addition to that, Ma Kuang is 1.15 times more volatile than Shih Kuen Plastics. It trades about -0.01 of its total potential returns per unit of risk. Shih Kuen Plastics is currently generating about 0.05 per unit of volatility. If you would invest 3,010 in Shih Kuen Plastics on October 4, 2024 and sell it today you would earn a total of 1,160 from holding Shih Kuen Plastics or generate 38.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ma Kuang Healthcare vs. Shih Kuen Plastics
Performance |
Timeline |
Ma Kuang Healthcare |
Shih Kuen Plastics |
Ma Kuang and Shih Kuen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ma Kuang and Shih Kuen
The main advantage of trading using opposite Ma Kuang and Shih Kuen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ma Kuang position performs unexpectedly, Shih Kuen 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 Shih Kuen will offset losses from the drop in Shih Kuen's long position.Ma Kuang vs. YuantaP shares Taiwan Electronics | Ma Kuang vs. YuantaP shares Taiwan Mid Cap | Ma Kuang vs. YuantaP shares Taiwan Top | Ma Kuang vs. Fubon MSCI Taiwan |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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