Correlation Between Nan Ya and WiseChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Nan Ya and WiseChip Semiconductor 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 WiseChip Semiconductor 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 WiseChip Semiconductor, you can compare the effects of market volatilities on Nan Ya and WiseChip Semiconductor 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 WiseChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and WiseChip Semiconductor.
Diversification Opportunities for Nan Ya and WiseChip Semiconductor
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nan and WiseChip is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor 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 WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of Nan Ya i.e., Nan Ya and WiseChip Semiconductor go up and down completely randomly.
Pair Corralation between Nan Ya and WiseChip Semiconductor
Assuming the 90 days trading horizon Nan Ya Plastics is expected to generate 1.03 times more return on investment than WiseChip Semiconductor. However, Nan Ya is 1.03 times more volatile than WiseChip Semiconductor. It trades about -0.12 of its potential returns per unit of risk. WiseChip Semiconductor is currently generating about -0.31 per unit of risk. If you would invest 4,180 in Nan Ya Plastics on September 5, 2024 and sell it today you would lose (215.00) from holding Nan Ya Plastics or give up 5.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nan Ya Plastics vs. WiseChip Semiconductor
Performance |
| Timeline |
| Nan Ya Plastics |
| WiseChip Semiconductor |
Nan Ya and WiseChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and WiseChip Semiconductor
The main advantage of trading using opposite Nan Ya and WiseChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, WiseChip Semiconductor 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 WiseChip Semiconductor will offset losses from the drop in WiseChip Semiconductor's long position.The idea behind Nan Ya Plastics and WiseChip Semiconductor 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.| WiseChip Semiconductor vs. Taiwan Semiconductor Manufacturing | WiseChip Semiconductor vs. Yang Ming Marine | WiseChip Semiconductor vs. AU Optronics | WiseChip Semiconductor vs. Nan Ya Plastics |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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