Correlation Between Nan Ya and GTM Holdings
Can any of the company-specific risk be diversified away by investing in both Nan Ya and GTM Holdings 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 Nan Ya and GTM Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nan Ya Plastics and GTM Holdings Corp, you can compare the effects of market volatilities on Nan Ya and GTM Holdings 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 Nan Ya with a short position of GTM Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and GTM Holdings.
Diversification Opportunities for Nan Ya and GTM Holdings
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nan and GTM is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and GTM Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTM Holdings Corp and Nan Ya 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 Nan Ya Plastics are associated (or correlated) with GTM Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTM Holdings Corp has no effect on the direction of Nan Ya i.e., Nan Ya and GTM Holdings go up and down completely randomly.
Pair Corralation between Nan Ya and GTM Holdings
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the GTM Holdings. In addition to that, Nan Ya is 3.17 times more volatile than GTM Holdings Corp. It trades about -0.12 of its total potential returns per unit of risk. GTM Holdings Corp is currently generating about 0.08 per unit of volatility. If you would invest 3,395 in GTM Holdings Corp on September 5, 2024 and sell it today you would earn a total of 35.00 from holding GTM Holdings Corp or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Plastics vs. GTM Holdings Corp
Performance |
| Timeline |
| Nan Ya Plastics |
| GTM Holdings Corp |
Nan Ya and GTM Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and GTM Holdings
The main advantage of trading using opposite Nan Ya and GTM Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, GTM Holdings 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 GTM Holdings will offset losses from the drop in GTM Holdings' long position.The idea behind Nan Ya Plastics and GTM Holdings 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.| GTM Holdings vs. Taiwan Semiconductor Manufacturing | GTM Holdings vs. Yang Ming Marine | GTM Holdings vs. AU Optronics | GTM Holdings vs. Nan Ya Plastics |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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