Correlation Between Taiwan Hopax and Shin Foong

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

By analyzing existing cross correlation between Taiwan Hopax Chemsistry and Shin Foong Specialty, you can compare the effects of market volatilities on Taiwan Hopax and Shin Foong 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 Taiwan Hopax with a short position of Shin Foong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Hopax and Shin Foong.

Diversification Opportunities for Taiwan Hopax and Shin Foong

0.78

Correlation Coefficient

Taiwan Hopax  Shin Foong

Poor diversification

The 3 months correlation between Taiwan and Shin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Hopax Chemsistry and Shin Foong Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Foong Specialty and Taiwan Hopax 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 Taiwan Hopax Chemsistry are associated (or correlated) with Shin Foong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Foong Specialty has no effect on the direction of Taiwan Hopax i.e., Taiwan Hopax and Shin Foong go up and down completely randomly.

Pair Corralation between Taiwan Hopax and Shin Foong

Assuming the 90 days trading horizon Taiwan Hopax Chemsistry is expected to generate 0.64 times more return on investment than Shin Foong. However, Taiwan Hopax Chemsistry is 1.56 times less risky than Shin Foong. It trades about -0.1 of its potential returns per unit of risk. Shin Foong Specialty is currently generating about -0.18 per unit of risk. If you would invest  3,870  in Taiwan Hopax Chemsistry on December 21, 2024 and sell it today you would lose (240.00) from holding Taiwan Hopax Chemsistry or give up 6.2% of portfolio value over 90 days.

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

Taiwan Hopax Chemsistry  vs.  Shin Foong Specialty

Taiwan Hopax Chemsistry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taiwan Hopax Chemsistry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Shin Foong Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shin Foong Specialty 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Taiwan Hopax and Shin Foong

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

The idea behind Taiwan Hopax Chemsistry and Shin Foong Specialty 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.