Correlation Between Tacheng Real and Shin Ruenn

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

By analyzing existing cross correlation between Tacheng Real Estate and Shin Ruenn Development, you can compare the effects of market volatilities on Tacheng Real and Shin Ruenn 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 Tacheng Real with a short position of Shin Ruenn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tacheng Real and Shin Ruenn.

Diversification Opportunities for Tacheng Real and Shin Ruenn

0.55

Correlation Coefficient

Tacheng Real  Shin Ruenn

Very weak diversification

The 3 months correlation between Tacheng and Shin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tacheng Real Estate and Shin Ruenn Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Ruenn Development and Tacheng Real 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 Tacheng Real Estate are associated (or correlated) with Shin Ruenn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Ruenn Development has no effect on the direction of Tacheng Real i.e., Tacheng Real and Shin Ruenn go up and down completely randomly.

Pair Corralation between Tacheng Real and Shin Ruenn

Assuming the 90 days trading horizon Tacheng Real Estate is expected to generate 1.11 times more return on investment than Shin Ruenn. However, Tacheng Real is 1.11 times more volatile than Shin Ruenn Development. It trades about 0.02 of its potential returns per unit of risk. Shin Ruenn Development is currently generating about -0.15 per unit of risk. If you would invest  4,165  in Tacheng Real Estate on September 12, 2024 and sell it today you would earn a total of  35.00  from holding Tacheng Real Estate or generate 0.84% return on investment over 90 days.

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

Tacheng Real Estate  vs.  Shin Ruenn Development

Tacheng Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tacheng Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tacheng Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shin Ruenn Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shin Ruenn Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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 Tacheng Real and Shin Ruenn

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

The idea behind Tacheng Real Estate and Shin Ruenn Development 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.