Correlation Between Nan Ya and Nantex Industry
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Nantex Industry 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 Nantex Industry 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 Nantex Industry Co, you can compare the effects of market volatilities on Nan Ya and Nantex Industry 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 Nantex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Nantex Industry.
Diversification Opportunities for Nan Ya and Nantex Industry
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nan and Nantex is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Nantex Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantex Industry 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 Nantex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantex Industry has no effect on the direction of Nan Ya i.e., Nan Ya and Nantex Industry go up and down completely randomly.
Pair Corralation between Nan Ya and Nantex Industry
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Nantex Industry. But the stock apears to be less risky and, when comparing its historical volatility, Nan Ya Plastics is 1.27 times less risky than Nantex Industry. The stock trades about -0.13 of its potential returns per unit of risk. The Nantex Industry Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,410 in Nantex Industry Co on August 25, 2024 and sell it today you would earn a total of 35.00 from holding Nantex Industry Co 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. Nantex Industry Co
Performance |
| Timeline |
| Nan Ya Plastics |
| Nantex Industry |
Nan Ya and Nantex Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Nantex Industry
The main advantage of trading using opposite Nan Ya and Nantex Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Nantex Industry 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 Nantex Industry will offset losses from the drop in Nantex Industry's long position.| Nan Ya vs. Cheng Shin Rubber | Nan Ya vs. Taiwan Cement Corp | Nan Ya vs. China Steel Chemical | Nan Ya vs. Yulon Motor Co |
| Nantex Industry vs. Cheng Shin Rubber | Nantex Industry vs. Taiwan Cement Corp | Nantex Industry vs. China Steel Chemical | Nantex Industry vs. Yulon Motor Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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