Correlation Between Nan Ya and International CSRC
Can any of the company-specific risk be diversified away by investing in both Nan Ya and International CSRC 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 International CSRC 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 International CSRC Investment, you can compare the effects of market volatilities on Nan Ya and International CSRC 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 International CSRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and International CSRC.
Diversification Opportunities for Nan Ya and International CSRC
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nan and International is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and International CSRC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International CSRC 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 International CSRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International CSRC has no effect on the direction of Nan Ya i.e., Nan Ya and International CSRC go up and down completely randomly.
Pair Corralation between Nan Ya and International CSRC
Assuming the 90 days trading horizon Nan Ya Plastics is expected to generate 1.76 times more return on investment than International CSRC. However, Nan Ya is 1.76 times more volatile than International CSRC Investment. It trades about 0.09 of its potential returns per unit of risk. International CSRC Investment is currently generating about -0.09 per unit of risk. If you would invest 3,100 in Nan Ya Plastics on October 28, 2024 and sell it today you would earn a total of 135.00 from holding Nan Ya Plastics or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Plastics vs. International CSRC Investment
Performance |
| Timeline |
| Nan Ya Plastics |
| International CSRC |
Nan Ya and International CSRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and International CSRC
The main advantage of trading using opposite Nan Ya and International CSRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, International CSRC 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 International CSRC will offset losses from the drop in International CSRC'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 |
| International CSRC vs. Nan Ya Plastics | International CSRC vs. Formosa Chemicals Fibre | International CSRC vs. China Steel Corp | International CSRC vs. Formosa Petrochemical Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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