Correlation Between Nan Ya and Channel Well
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Channel Well 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 Channel Well 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 Channel Well Technology, you can compare the effects of market volatilities on Nan Ya and Channel Well 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 Channel Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Channel Well.
Diversification Opportunities for Nan Ya and Channel Well
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nan and Channel is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Channel Well Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Channel Well Technology 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 Channel Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Channel Well Technology has no effect on the direction of Nan Ya i.e., Nan Ya and Channel Well go up and down completely randomly.
Pair Corralation between Nan Ya and Channel Well
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Channel Well. But the stock apears to be less risky and, when comparing its historical volatility, Nan Ya Plastics is 1.34 times less risky than Channel Well. The stock trades about -0.44 of its potential returns per unit of risk. The Channel Well Technology is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 7,020 in Channel Well Technology on October 12, 2024 and sell it today you would earn a total of 960.00 from holding Channel Well Technology or generate 13.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nan Ya Plastics vs. Channel Well Technology
Performance |
| Timeline |
| Nan Ya Plastics |
| Channel Well Technology |
Nan Ya and Channel Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Channel Well
The main advantage of trading using opposite Nan Ya and Channel Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Channel Well 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 Channel Well will offset losses from the drop in Channel Well'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 |
| Channel Well vs. Topco Scientific Co | Channel Well vs. Asia Vital Components | Channel Well vs. Ardentec | Channel Well vs. Adata Technology 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 CEOs Directory module to screen CEOs from public companies around the world.
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