Correlation Between Nan Ya and EnTie Commercial
Can any of the company-specific risk be diversified away by investing in both Nan Ya and EnTie Commercial 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 EnTie Commercial 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 EnTie Commercial Bank, you can compare the effects of market volatilities on Nan Ya and EnTie Commercial 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 EnTie Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and EnTie Commercial.
Diversification Opportunities for Nan Ya and EnTie Commercial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nan and EnTie is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and EnTie Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnTie Commercial Bank 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 EnTie Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnTie Commercial Bank has no effect on the direction of Nan Ya i.e., Nan Ya and EnTie Commercial go up and down completely randomly.
Pair Corralation between Nan Ya and EnTie Commercial
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the EnTie Commercial. In addition to that, Nan Ya is 1.46 times more volatile than EnTie Commercial Bank. It trades about -0.14 of its total potential returns per unit of risk. EnTie Commercial Bank is currently generating about 0.01 per unit of volatility. If you would invest 1,390 in EnTie Commercial Bank on November 4, 2024 and sell it today you would earn a total of 20.00 from holding EnTie Commercial Bank or generate 1.44% 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. EnTie Commercial Bank
Performance |
| Timeline |
| Nan Ya Plastics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| EnTie Commercial Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nan Ya and EnTie Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and EnTie Commercial
The main advantage of trading using opposite Nan Ya and EnTie Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, EnTie Commercial 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 EnTie Commercial will offset losses from the drop in EnTie Commercial's long position.The idea behind Nan Ya Plastics and EnTie Commercial Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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