Correlation Between Shin Ruenn and HUA YU

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

By analyzing existing cross correlation between Shin Ruenn Development and HUA YU LIEN, you can compare the effects of market volatilities on Shin Ruenn and HUA YU 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 Shin Ruenn with a short position of HUA YU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Ruenn and HUA YU.

Diversification Opportunities for Shin Ruenn and HUA YU

0.61

Correlation Coefficient

Shin Ruenn  HUA YU

Poor diversification

The 3 months correlation between Shin and HUA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shin Ruenn Development and HUA YU LIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUA YU LIEN and Shin Ruenn 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 Shin Ruenn Development are associated (or correlated) with HUA YU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUA YU LIEN has no effect on the direction of Shin Ruenn i.e., Shin Ruenn and HUA YU go up and down completely randomly.

Pair Corralation between Shin Ruenn and HUA YU

Assuming the 90 days trading horizon Shin Ruenn Development is expected to generate 0.92 times more return on investment than HUA YU. However, Shin Ruenn Development is 1.08 times less risky than HUA YU. It trades about 0.1 of its potential returns per unit of risk. HUA YU LIEN is currently generating about 0.04 per unit of risk. If you would invest  6,440  in Shin Ruenn Development on December 29, 2024 and sell it today you would earn a total of  590.00  from holding Shin Ruenn Development or generate 9.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.25%
Values	Daily Returns

Shin Ruenn Development  vs.  HUA YU LIEN

Shin Ruenn Development

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Ruenn Development are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shin Ruenn may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HUA YU LIEN

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUA YU LIEN are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, HUA YU 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 Shin Ruenn and HUA YU

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

The idea behind Shin Ruenn Development and HUA YU LIEN 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.