Correlation Between GTM Holdings and Shinkong Synthetic

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

By analyzing existing cross correlation between GTM Holdings Corp and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on GTM Holdings and Shinkong Synthetic 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 GTM Holdings with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTM Holdings and Shinkong Synthetic.

Diversification Opportunities for GTM Holdings and Shinkong Synthetic

0.8

Correlation Coefficient

GTM Holdings  Shinkong Synthetic

Very poor diversification

The 3 months correlation between GTM and Shinkong is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GTM Holdings Corp and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and GTM Holdings 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 GTM Holdings Corp are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of GTM Holdings i.e., GTM Holdings and Shinkong Synthetic go up and down completely randomly.

Pair Corralation between GTM Holdings and Shinkong Synthetic

Assuming the 90 days trading horizon GTM Holdings Corp is expected to under-perform the Shinkong Synthetic. But the stock apears to be less risky and, when comparing its historical volatility, GTM Holdings Corp is 1.47 times less risky than Shinkong Synthetic. The stock trades about -0.09 of its potential returns per unit of risk. The Shinkong Synthetic Fiber is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,605  in Shinkong Synthetic Fiber on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Shinkong Synthetic Fiber or generate 0.0% return on investment over 90 days.

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

GTM Holdings Corp  vs.  Shinkong Synthetic Fiber

GTM Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GTM Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, GTM Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shinkong Synthetic Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinkong Synthetic Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shinkong Synthetic 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 GTM Holdings and Shinkong Synthetic

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

The idea behind GTM Holdings Corp and Shinkong Synthetic Fiber 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 Stocks Directory module to find actively traded stocks across global markets.