Correlation Between ALFORMER Industrial and Shin Kong

Can any of the company-specific risk be diversified away by investing in both ALFORMER Industrial and Shin Kong 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 ALFORMER Industrial and Shin Kong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALFORMER Industrial Co and Shin Kong Financial, you can compare the effects of market volatilities on ALFORMER Industrial and Shin Kong 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 ALFORMER Industrial with a short position of Shin Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALFORMER Industrial and Shin Kong.

Diversification Opportunities for ALFORMER Industrial and Shin Kong

-0.41

Correlation Coefficient

ALFORMER Industrial  Shin Kong

Very good diversification

The 3 months correlation between ALFORMER and Shin is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding ALFORMER Industrial Co and Shin Kong Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Kong Financial and ALFORMER Industrial 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 ALFORMER Industrial Co are associated (or correlated) with Shin Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Kong Financial has no effect on the direction of ALFORMER Industrial i.e., ALFORMER Industrial and Shin Kong go up and down completely randomly.

Pair Corralation between ALFORMER Industrial and Shin Kong

Assuming the 90 days trading horizon ALFORMER Industrial Co is expected to generate 12.76 times more return on investment than Shin Kong. However, ALFORMER Industrial is 12.76 times more volatile than Shin Kong Financial. It trades about 0.03 of its potential returns per unit of risk. Shin Kong Financial is currently generating about 0.23 per unit of risk. If you would invest  3,045  in ALFORMER Industrial Co on October 20, 2024 and sell it today you would earn a total of  65.00  from holding ALFORMER Industrial Co or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

ALFORMER Industrial Co  vs.  Shin Kong Financial

ALFORMER Industrial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALFORMER Industrial Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ALFORMER Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shin Kong Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Kong Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Shin Kong is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ALFORMER Industrial and Shin Kong

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

The idea behind ALFORMER Industrial Co and Shin Kong Financial 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.