Correlation Between Shih Kuen and Connection Technology
Can any of the company-specific risk be diversified away by investing in both Shih Kuen and Connection Technology 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 Connection Technology 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 Connection Technology Systems, you can compare the effects of market volatilities on Shih Kuen and Connection Technology 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 Connection Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shih Kuen and Connection Technology.
Diversification Opportunities for Shih Kuen and Connection Technology
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shih and Connection is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Shih Kuen Plastics and Connection Technology Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connection Technology 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 Connection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connection Technology has no effect on the direction of Shih Kuen i.e., Shih Kuen and Connection Technology go up and down completely randomly.
Pair Corralation between Shih Kuen and Connection Technology
Assuming the 90 days trading horizon Shih Kuen Plastics is expected to generate 0.45 times more return on investment than Connection Technology. However, Shih Kuen Plastics is 2.22 times less risky than Connection Technology. It trades about -0.05 of its potential returns per unit of risk. Connection Technology Systems is currently generating about -0.03 per unit of risk. If you would invest 4,520 in Shih Kuen Plastics on October 4, 2024 and sell it today you would lose (350.00) from holding Shih Kuen Plastics or give up 7.74% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Shih Kuen Plastics vs. Connection Technology Systems
Performance |
Timeline |
Shih Kuen Plastics |
Connection Technology |
Shih Kuen and Connection Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shih Kuen and Connection Technology
The main advantage of trading using opposite Shih Kuen and Connection Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shih Kuen position performs unexpectedly, Connection Technology 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 Connection Technology will offset losses from the drop in Connection Technology's long position.Shih Kuen vs. Cheng Shin Rubber | Shih Kuen vs. Nankang Rubber Tire | Shih Kuen vs. Ocean Plastics Co | Shih Kuen vs. Formosan Rubber Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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