Correlation Between Nan Ya and Primax Electronics
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Primax Electronics 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 Primax Electronics 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 Primax Electronics, you can compare the effects of market volatilities on Nan Ya and Primax Electronics 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 Primax Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Primax Electronics.
Diversification Opportunities for Nan Ya and Primax Electronics
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nan and Primax is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Primax Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primax Electronics 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 Primax Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primax Electronics has no effect on the direction of Nan Ya i.e., Nan Ya and Primax Electronics go up and down completely randomly.
Pair Corralation between Nan Ya and Primax Electronics
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Primax Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Nan Ya Plastics is 1.19 times less risky than Primax Electronics. The stock trades about -0.12 of its potential returns per unit of risk. The Primax Electronics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,880 in Primax Electronics on September 5, 2024 and sell it today you would earn a total of 110.00 from holding Primax Electronics or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Plastics vs. Primax Electronics
Performance |
| Timeline |
| Nan Ya Plastics |
| Primax Electronics |
Nan Ya and Primax Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Primax Electronics
The main advantage of trading using opposite Nan Ya and Primax Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Primax Electronics 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 Primax Electronics will offset losses from the drop in Primax Electronics' long position.The idea behind Nan Ya Plastics and Primax Electronics 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.| Primax Electronics vs. Flexium Interconnect | Primax Electronics vs. Radiant Opto Electronics Corp | Primax Electronics vs. Merry Electronics Co | Primax Electronics vs. BizLink Holding |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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