Correlation Between Nan Ya and Cathay Real
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Cathay Real 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 Cathay Real 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 Cathay Real Estate, you can compare the effects of market volatilities on Nan Ya and Cathay Real 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 Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Cathay Real.
Diversification Opportunities for Nan Ya and Cathay Real
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nan and Cathay is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Cathay Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Real Estate 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 Cathay Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Real Estate has no effect on the direction of Nan Ya i.e., Nan Ya and Cathay Real go up and down completely randomly.
Pair Corralation between Nan Ya and Cathay Real
Assuming the 90 days trading horizon Nan Ya Plastics is expected to generate 2.56 times more return on investment than Cathay Real. However, Nan Ya is 2.56 times more volatile than Cathay Real Estate. It trades about 0.02 of its potential returns per unit of risk. Cathay Real Estate is currently generating about -0.15 per unit of risk. If you would invest 3,290 in Nan Ya Plastics on October 20, 2024 and sell it today you would earn a total of 5.00 from holding Nan Ya Plastics or generate 0.15% 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. Cathay Real Estate
Performance |
| Timeline |
| Nan Ya Plastics |
| Cathay Real Estate |
Nan Ya and Cathay Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Cathay Real
The main advantage of trading using opposite Nan Ya and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Cathay Real 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 Cathay Real will offset losses from the drop in Cathay Real'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 |
| Cathay Real vs. Cathay Financial Holding | Cathay Real vs. Nan Ya Plastics | Cathay Real vs. Chang Hwa Commercial | Cathay Real vs. China Development Financial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |