Correlation Between Shin Kong and Bonny Worldwide
Can any of the company-specific risk be diversified away by investing in both Shin Kong and Bonny Worldwide 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 Shin Kong and Bonny Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Kong Financial and Bonny Worldwide, you can compare the effects of market volatilities on Shin Kong and Bonny Worldwide 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 Shin Kong with a short position of Bonny Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and Bonny Worldwide.
Diversification Opportunities for Shin Kong and Bonny Worldwide
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shin and Bonny is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Bonny Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonny Worldwide and Shin Kong 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 Shin Kong Financial are associated (or correlated) with Bonny Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonny Worldwide has no effect on the direction of Shin Kong i.e., Shin Kong and Bonny Worldwide go up and down completely randomly.
Pair Corralation between Shin Kong and Bonny Worldwide
Assuming the 90 days trading horizon Shin Kong Financial is expected to generate 0.5 times more return on investment than Bonny Worldwide. However, Shin Kong Financial is 2.0 times less risky than Bonny Worldwide. It trades about 0.27 of its potential returns per unit of risk. Bonny Worldwide is currently generating about -0.17 per unit of risk. If you would invest 803.00 in Shin Kong Financial on February 7, 2024 and sell it today you would earn a total of 81.00 from holding Shin Kong Financial or generate 10.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Shin Kong Financial vs. Bonny Worldwide
Performance |
Timeline |
Shin Kong Financial |
Bonny Worldwide |
Shin Kong and Bonny Worldwide Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shin Kong and Bonny Worldwide
The main advantage of trading using opposite Shin Kong and Bonny Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong position performs unexpectedly, Bonny Worldwide 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 Bonny Worldwide will offset losses from the drop in Bonny Worldwide's long position.Shin Kong vs. Cathay Financial Holding | Shin Kong vs. Taishin Financial Holding | Shin Kong vs. Fubon Financial Holding | Shin Kong vs. CTBC Financial Holding |
Bonny Worldwide vs. Sunny Friend Environmental | Bonny Worldwide vs. Cleanaway Co | Bonny Worldwide vs. Charoen Pokphand Enterprise | Bonny Worldwide vs. TTET Union Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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