Correlation Between Nan Ya and Tex Year
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Tex Year 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 Tex Year 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 Tex Year Industries, you can compare the effects of market volatilities on Nan Ya and Tex Year 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 Tex Year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Tex Year.
Diversification Opportunities for Nan Ya and Tex Year
Poor diversification
The 3 months correlation between Nan and Tex is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Tex Year Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tex Year Industries 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 Tex Year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tex Year Industries has no effect on the direction of Nan Ya i.e., Nan Ya and Tex Year go up and down completely randomly.
Pair Corralation between Nan Ya and Tex Year
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Tex Year. In addition to that, Nan Ya is 1.0 times more volatile than Tex Year Industries. It trades about -0.23 of its total potential returns per unit of risk. Tex Year Industries is currently generating about -0.1 per unit of volatility. If you would invest 2,105 in Tex Year Industries on August 30, 2024 and sell it today you would lose (145.00) from holding Tex Year Industries or give up 6.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Plastics vs. Tex Year Industries
Performance |
| Timeline |
| Nan Ya Plastics |
| Tex Year Industries |
Nan Ya and Tex Year Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Tex Year
The main advantage of trading using opposite Nan Ya and Tex Year positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Tex Year 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 Tex Year will offset losses from the drop in Tex Year'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 |
| Tex Year vs. Jinan Acetate Chemical | Tex Year vs. San Fu Chemical | Tex Year vs. Concraft Holding Co | Tex Year vs. Halfords Group PLC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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