Correlation Between Shinkong Insurance and Waffer Technology

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

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

Diversification Opportunities for Shinkong Insurance and Waffer Technology

-0.53

Correlation Coefficient

Shinkong Insurance  Waffer Technology

Excellent diversification

The 3 months correlation between Shinkong and Waffer is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shinkong Insurance Co and Waffer Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waffer Technology Corp and Shinkong Insurance 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 Shinkong Insurance Co are associated (or correlated) with Waffer Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waffer Technology Corp has no effect on the direction of Shinkong Insurance i.e., Shinkong Insurance and Waffer Technology go up and down completely randomly.

Pair Corralation between Shinkong Insurance and Waffer Technology

Assuming the 90 days trading horizon Shinkong Insurance is expected to generate 71.32 times less return on investment than Waffer Technology. But when comparing it to its historical volatility, Shinkong Insurance Co is 62.85 times less risky than Waffer Technology. It trades about 0.07 of its potential returns per unit of risk. Waffer Technology Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,450  in Waffer Technology Corp on September 30, 2024 and sell it today you would lose (2,550) from holding Waffer Technology Corp or give up 26.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Shinkong Insurance Co  vs.  Waffer Technology Corp

Shinkong Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinkong Insurance Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shinkong Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Waffer Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waffer Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Waffer Technology 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 Shinkong Insurance and Waffer Technology

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

The idea behind Shinkong Insurance Co and Waffer Technology Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.