Correlation Between Garmin and Shui On

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

By analyzing existing cross correlation between Garmin and Shui On Land, you can compare the effects of market volatilities on Garmin and Shui On 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 Garmin with a short position of Shui On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garmin and Shui On.

Diversification Opportunities for Garmin and Shui On

0.65

Correlation Coefficient

Garmin  Shui On

Poor diversification

The 3 months correlation between Garmin and Shui is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Garmin and Shui On Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shui On Land and Garmin 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 Garmin are associated (or correlated) with Shui On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shui On Land has no effect on the direction of Garmin i.e., Garmin and Shui On go up and down completely randomly.

Pair Corralation between Garmin and Shui On

Given the investment horizon of 90 days Garmin is expected to generate 0.07 times more return on investment than Shui On. However, Garmin is 15.19 times less risky than Shui On. It trades about 0.11 of its potential returns per unit of risk. Shui On Land is currently generating about -0.07 per unit of risk. If you would invest  10,245  in Garmin on October 4, 2024 and sell it today you would earn a total of  10,210  from holding Garmin or generate 99.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.72%
Values	Daily Returns

Garmin  vs.  Shui On Land

Garmin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Garmin displayed solid returns over the last few months and may actually be approaching a breakup point.

Shui On Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shui On Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Shui On is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Garmin and Shui On

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

The idea behind Garmin and Shui On Land 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.