Correlation Between Nan Ya and Taiwan Sanyo
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Taiwan Sanyo 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 Taiwan Sanyo 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 Taiwan Sanyo Electric, you can compare the effects of market volatilities on Nan Ya and Taiwan Sanyo 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 Taiwan Sanyo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Taiwan Sanyo.
Diversification Opportunities for Nan Ya and Taiwan Sanyo
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nan and Taiwan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Taiwan Sanyo Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sanyo Electric 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 Taiwan Sanyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sanyo Electric has no effect on the direction of Nan Ya i.e., Nan Ya and Taiwan Sanyo go up and down completely randomly.
Pair Corralation between Nan Ya and Taiwan Sanyo
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Taiwan Sanyo. In addition to that, Nan Ya is 1.42 times more volatile than Taiwan Sanyo Electric. It trades about -0.11 of its total potential returns per unit of risk. Taiwan Sanyo Electric is currently generating about 0.02 per unit of volatility. If you would invest 3,620 in Taiwan Sanyo Electric on October 25, 2024 and sell it today you would earn a total of 250.00 from holding Taiwan Sanyo Electric or generate 6.91% 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. Taiwan Sanyo Electric
Performance |
| Timeline |
| Nan Ya Plastics |
| Taiwan Sanyo Electric |
Nan Ya and Taiwan Sanyo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Taiwan Sanyo
The main advantage of trading using opposite Nan Ya and Taiwan Sanyo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Taiwan Sanyo 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 Taiwan Sanyo will offset losses from the drop in Taiwan Sanyo's long position.| Nan Ya vs. Formosa Plastics Corp | Nan Ya vs. Formosa Chemicals Fibre | Nan Ya vs. China Steel Corp | Nan Ya vs. Formosa Petrochemical Corp |
| Taiwan Sanyo vs. Sampo Corp | Taiwan Sanyo vs. China Electric Manufacturing | Taiwan Sanyo vs. Walsin Lihwa Corp | Taiwan Sanyo vs. Ta Ya Electric |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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