Correlation Between Asia Metal and Shih Kuen

Can any of the company-specific risk be diversified away by investing in both Asia Metal and Shih Kuen 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 Asia Metal and Shih Kuen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Metal Industries and Shih Kuen Plastics, you can compare the effects of market volatilities on Asia Metal and Shih Kuen 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 Asia Metal with a short position of Shih Kuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Shih Kuen.

Diversification Opportunities for Asia Metal and Shih Kuen

-0.94

Correlation Coefficient

Asia Metal  Shih Kuen

Pay attention - limited upside

The 3 months correlation between Asia and Shih is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Industries and Shih Kuen Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Kuen Plastics and Asia Metal 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 Asia Metal Industries are associated (or correlated) with Shih Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Kuen Plastics has no effect on the direction of Asia Metal i.e., Asia Metal and Shih Kuen go up and down completely randomly.

Pair Corralation between Asia Metal and Shih Kuen

Assuming the 90 days trading horizon Asia Metal Industries is expected to under-perform the Shih Kuen. In addition to that, Asia Metal is 2.45 times more volatile than Shih Kuen Plastics. It trades about -0.22 of its total potential returns per unit of risk. Shih Kuen Plastics is currently generating about 0.25 per unit of volatility. If you would invest  4,190  in Shih Kuen Plastics on December 21, 2024 and sell it today you would earn a total of  455.00  from holding Shih Kuen Plastics or generate 10.86% return on investment over 90 days.

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

Asia Metal Industries  vs.  Shih Kuen Plastics

Asia Metal Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Metal Industries 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.

Shih Kuen Plastics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shih Kuen Plastics are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shih Kuen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Asia Metal and Shih Kuen

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

The idea behind Asia Metal Industries and Shih Kuen Plastics 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.