Correlation Between Nan Ya and Micro Star
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Micro Star 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 Micro Star 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 Micro Star International Co, you can compare the effects of market volatilities on Nan Ya and Micro Star 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 Micro Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Micro Star.
Diversification Opportunities for Nan Ya and Micro Star
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nan and Micro is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Micro Star International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Star Internati 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 Micro Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Star Internati has no effect on the direction of Nan Ya i.e., Nan Ya and Micro Star go up and down completely randomly.
Pair Corralation between Nan Ya and Micro Star
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Micro Star. In addition to that, Nan Ya is 1.01 times more volatile than Micro Star International Co. It trades about -0.35 of its total potential returns per unit of risk. Micro Star International Co is currently generating about -0.17 per unit of volatility. If you would invest 18,100 in Micro Star International Co on September 13, 2024 and sell it today you would lose (1,100) from holding Micro Star International Co or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Plastics vs. Micro Star International Co
Performance |
| Timeline |
| Nan Ya Plastics |
| Micro Star Internati |
Nan Ya and Micro Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Micro Star
The main advantage of trading using opposite Nan Ya and Micro Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Micro Star 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 Micro Star will offset losses from the drop in Micro Star's long position.| Nan Ya vs. Tainan Spinning Co | Nan Ya vs. Lealea Enterprise Co | Nan Ya vs. China Petrochemical Development | Nan Ya vs. Ruentex Development Co |
| Micro Star vs. Gigabyte Technology Co | Micro Star vs. Asustek Computer | Micro Star vs. Quanta Computer | Micro Star vs. Compal Electronics |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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