Correlation Between Shin Zu and Yeong Guan

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

By analyzing existing cross correlation between Shin Zu Shing and Yeong Guan Energy, you can compare the effects of market volatilities on Shin Zu and Yeong Guan 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 Zu with a short position of Yeong Guan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Zu and Yeong Guan.

Diversification Opportunities for Shin Zu and Yeong Guan

-0.11

Correlation Coefficient

Shin Zu  Yeong Guan

Good diversification

The 3 months correlation between Shin and Yeong is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Shin Zu Shing and Yeong Guan Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yeong Guan Energy and Shin Zu 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 Zu Shing are associated (or correlated) with Yeong Guan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yeong Guan Energy has no effect on the direction of Shin Zu i.e., Shin Zu and Yeong Guan go up and down completely randomly.

Pair Corralation between Shin Zu and Yeong Guan

Assuming the 90 days trading horizon Shin Zu Shing is expected to generate 1.93 times more return on investment than Yeong Guan. However, Shin Zu is 1.93 times more volatile than Yeong Guan Energy. It trades about 0.03 of its potential returns per unit of risk. Yeong Guan Energy is currently generating about -0.08 per unit of risk. If you would invest  19,800  in Shin Zu Shing on September 28, 2024 and sell it today you would earn a total of  800.00  from holding Shin Zu Shing or generate 4.04% return on investment over 90 days.

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

Shin Zu Shing  vs.  Yeong Guan Energy

Shin Zu Shing

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Shin Zu Shing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Shin Zu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yeong Guan Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yeong Guan Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Shin Zu and Yeong Guan

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

The idea behind Shin Zu Shing and Yeong Guan Energy 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 Global Correlations module to find global opportunities by holding instruments from different markets.