Correlation Between Merida Industry and Shin Zu
Can any of the company-specific risk be diversified away by investing in both Merida Industry and Shin Zu 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 Merida Industry and Shin Zu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merida Industry Co and Shin Zu Shing, you can compare the effects of market volatilities on Merida Industry and Shin Zu 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 Merida Industry with a short position of Shin Zu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merida Industry and Shin Zu.
Diversification Opportunities for Merida Industry and Shin Zu
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Merida and Shin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Shin Zu Shing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Zu Shing and Merida Industry 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 Merida Industry Co are associated (or correlated) with Shin Zu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Zu Shing has no effect on the direction of Merida Industry i.e., Merida Industry and Shin Zu go up and down completely randomly.
Pair Corralation between Merida Industry and Shin Zu
Assuming the 90 days trading horizon Merida Industry Co is expected to under-perform the Shin Zu. But the stock apears to be less risky and, when comparing its historical volatility, Merida Industry Co is 1.85 times less risky than Shin Zu. The stock trades about -0.11 of its potential returns per unit of risk. The Shin Zu Shing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 19,250 in Shin Zu Shing on September 26, 2024 and sell it today you would earn a total of 1,000.00 from holding Shin Zu Shing or generate 5.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Merida Industry Co vs. Shin Zu Shing
Performance |
Timeline |
Merida Industry |
Shin Zu Shing |
Merida Industry and Shin Zu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merida Industry and Shin Zu
The main advantage of trading using opposite Merida Industry and Shin Zu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merida Industry position performs unexpectedly, Shin Zu 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 Zu will offset losses from the drop in Shin Zu's long position.Merida Industry vs. Cheng Shin Rubber | Merida Industry vs. Uni President Enterprises Corp | Merida Industry vs. Pou Chen Corp |
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Check out your portfolio center.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 Stocks Directory module to find actively traded stocks across global markets.
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