Correlation Between Shieh Yih and Cheng Uei

Can any of the company-specific risk be diversified away by investing in both Shieh Yih and Cheng Uei 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 Shieh Yih and Cheng Uei into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shieh Yih Machinery and Cheng Uei Precision, you can compare the effects of market volatilities on Shieh Yih and Cheng Uei 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 Shieh Yih with a short position of Cheng Uei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shieh Yih and Cheng Uei.

Diversification Opportunities for Shieh Yih and Cheng Uei

-0.34

Correlation Coefficient

Shieh Yih  Cheng Uei

Very good diversification

The 3 months correlation between Shieh and Cheng is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Shieh Yih Machinery and Cheng Uei Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Uei Precision and Shieh Yih 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 Shieh Yih Machinery are associated (or correlated) with Cheng Uei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Uei Precision has no effect on the direction of Shieh Yih i.e., Shieh Yih and Cheng Uei go up and down completely randomly.

Pair Corralation between Shieh Yih and Cheng Uei

Assuming the 90 days trading horizon Shieh Yih Machinery is expected to under-perform the Cheng Uei. But the stock apears to be less risky and, when comparing its historical volatility, Shieh Yih Machinery is 1.14 times less risky than Cheng Uei. The stock trades about -0.07 of its potential returns per unit of risk. The Cheng Uei Precision is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  7,400  in Cheng Uei Precision on October 22, 2024 and sell it today you would lose (660.00) from holding Cheng Uei Precision or give up 8.92% of portfolio value over 90 days.

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

Shieh Yih Machinery  vs.  Cheng Uei Precision

Shieh Yih Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shieh Yih Machinery 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.

Cheng Uei Precision

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheng Uei Precision are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cheng Uei may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shieh Yih and Cheng Uei

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

The idea behind Shieh Yih Machinery and Cheng Uei Precision 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.