Correlation Between Hsin Kao and Shin Hai

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

By analyzing existing cross correlation between Hsin Kao Gas and Shin Hai Gas, you can compare the effects of market volatilities on Hsin Kao and Shin Hai 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 Hsin Kao with a short position of Shin Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Kao and Shin Hai.

Diversification Opportunities for Hsin Kao and Shin Hai

0.34

Correlation Coefficient

Hsin Kao  Shin Hai

Weak diversification

The 3 months correlation between Hsin and Shin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Kao Gas and Shin Hai Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Hai Gas and Hsin Kao 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 Hsin Kao Gas are associated (or correlated) with Shin Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Hai Gas has no effect on the direction of Hsin Kao i.e., Hsin Kao and Shin Hai go up and down completely randomly.

Pair Corralation between Hsin Kao and Shin Hai

Assuming the 90 days trading horizon Hsin Kao Gas is expected to generate 0.73 times more return on investment than Shin Hai. However, Hsin Kao Gas is 1.36 times less risky than Shin Hai. It trades about 0.11 of its potential returns per unit of risk. Shin Hai Gas is currently generating about 0.02 per unit of risk. If you would invest  3,445  in Hsin Kao Gas on December 29, 2024 and sell it today you would earn a total of  115.00  from holding Hsin Kao Gas or generate 3.34% return on investment over 90 days.

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

Hsin Kao Gas  vs.  Shin Hai Gas

Hsin Kao Gas

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hsin Kao Gas are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hsin Kao is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shin Hai Gas

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Hai Gas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shin Hai 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 Hsin Kao and Shin Hai

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

The idea behind Hsin Kao Gas and Shin Hai Gas 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.