Correlation Between Shih Kuen and Wholetech System

Can any of the company-specific risk be diversified away by investing in both Shih Kuen and Wholetech System 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 Shih Kuen and Wholetech System into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shih Kuen Plastics and Wholetech System Hitech, you can compare the effects of market volatilities on Shih Kuen and Wholetech System 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 Shih Kuen with a short position of Wholetech System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shih Kuen and Wholetech System.

Diversification Opportunities for Shih Kuen and Wholetech System

0.27

Correlation Coefficient

Shih Kuen  Wholetech System

Modest diversification

The 3 months correlation between Shih and Wholetech is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shih Kuen Plastics and Wholetech System Hitech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wholetech System Hitech and Shih Kuen 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 Shih Kuen Plastics are associated (or correlated) with Wholetech System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wholetech System Hitech has no effect on the direction of Shih Kuen i.e., Shih Kuen and Wholetech System go up and down completely randomly.

Pair Corralation between Shih Kuen and Wholetech System

Assuming the 90 days trading horizon Shih Kuen is expected to generate 2.37 times less return on investment than Wholetech System. But when comparing it to its historical volatility, Shih Kuen Plastics is 1.38 times less risky than Wholetech System. It trades about 0.05 of its potential returns per unit of risk. Wholetech System Hitech is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,067  in Wholetech System Hitech on October 1, 2024 and sell it today you would earn a total of  6,333  from holding Wholetech System Hitech or generate 155.72% return on investment over 90 days.

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

Shih Kuen Plastics  vs.  Wholetech System Hitech

Shih Kuen Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shih Kuen Plastics 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Wholetech System Hitech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wholetech System Hitech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Wholetech System is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Shih Kuen and Wholetech System

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

The idea behind Shih Kuen Plastics and Wholetech System Hitech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.