Correlation Between Shih Kuen and Connection Technology

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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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shih Kuen Plastics  vs.  Connection Technology Systems

 Performance 
       Timeline  
Shih Kuen Plastics 

Risk-Adjusted Performance

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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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Connection Technology 

Risk-Adjusted Performance

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

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.
The idea behind Shih Kuen Plastics and Connection Technology Systems 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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