Correlation Between British Amer and Shihlin Electric
Can any of the company-specific risk be diversified away by investing in both British Amer and Shihlin Electric 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 British Amer and Shihlin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Shihlin Electric Engineering, you can compare the effects of market volatilities on British Amer and Shihlin Electric 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 British Amer with a short position of Shihlin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Shihlin Electric.
Diversification Opportunities for British Amer and Shihlin Electric
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between British and Shihlin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Shihlin Electric Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shihlin Electric Eng and British Amer 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 British American Tobacco are associated (or correlated) with Shihlin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shihlin Electric Eng has no effect on the direction of British Amer i.e., British Amer and Shihlin Electric go up and down completely randomly.
Pair Corralation between British Amer and Shihlin Electric
Considering the 90-day investment horizon British American Tobacco is expected to under-perform the Shihlin Electric. But the stock apears to be less risky and, when comparing its historical volatility, British American Tobacco is 6.15 times less risky than Shihlin Electric. The stock trades about -0.09 of its potential returns per unit of risk. The Shihlin Electric Engineering is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 29,900 in Shihlin Electric Engineering on January 25, 2024 and sell it today you would earn a total of 1,700 from holding Shihlin Electric Engineering or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
British American Tobacco vs. Shihlin Electric Engineering
Performance |
| Timeline |
| British American Tobacco |
| Shihlin Electric Eng |
British Amer and Shihlin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and Shihlin Electric
The main advantage of trading using opposite British Amer and Shihlin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, Shihlin Electric 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 Shihlin Electric will offset losses from the drop in Shihlin Electric's long position.| British Amer vs. Universal | British Amer vs. Imperial Brands PLC | British Amer vs. Philip Morris International | British Amer vs. Japan Tobacco ADR |
| Shihlin Electric vs. Evergreen International Storage | Shihlin Electric vs. Sincere Navigation Corp | Shihlin Electric vs. CSBC Corp Taiwan | Shihlin Electric vs. Hung Sheng Construction |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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