Correlation Between Nan Ya and Cheng Shin
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Cheng Shin 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 Cheng Shin 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 Cheng Shin Rubber, you can compare the effects of market volatilities on Nan Ya and Cheng Shin 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 Cheng Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Cheng Shin.
Diversification Opportunities for Nan Ya and Cheng Shin
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nan and Cheng is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Cheng Shin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Shin Rubber 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 Cheng Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Shin Rubber has no effect on the direction of Nan Ya i.e., Nan Ya and Cheng Shin go up and down completely randomly.
Pair Corralation between Nan Ya and Cheng Shin
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Cheng Shin. In addition to that, Nan Ya is 1.05 times more volatile than Cheng Shin Rubber. It trades about -0.19 of its total potential returns per unit of risk. Cheng Shin Rubber is currently generating about 0.06 per unit of volatility. If you would invest 4,640 in Cheng Shin Rubber on October 26, 2024 and sell it today you would earn a total of 325.00 from holding Cheng Shin Rubber or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Plastics vs. Cheng Shin Rubber
Performance |
| Timeline |
| Nan Ya Plastics |
| Cheng Shin Rubber |
Nan Ya and Cheng Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Cheng Shin
The main advantage of trading using opposite Nan Ya and Cheng Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Cheng Shin 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 Cheng Shin will offset losses from the drop in Cheng Shin'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 |
| Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Formosa Chemicals Fibre | Cheng Shin vs. Asia Cement Corp | Cheng Shin vs. Pou Chen 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |