Correlation Between Nan Ya and M3 Technology
Can any of the company-specific risk be diversified away by investing in both Nan Ya and M3 Technology 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 M3 Technology 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 M3 Technology, you can compare the effects of market volatilities on Nan Ya and M3 Technology 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 M3 Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and M3 Technology.
Diversification Opportunities for Nan Ya and M3 Technology
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nan and 6799 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and M3 Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 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 M3 Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Technology has no effect on the direction of Nan Ya i.e., Nan Ya and M3 Technology go up and down completely randomly.
Pair Corralation between Nan Ya and M3 Technology
Assuming the 90 days trading horizon Nan Ya Plastics is expected to generate 0.74 times more return on investment than M3 Technology. However, Nan Ya Plastics is 1.35 times less risky than M3 Technology. It trades about -0.19 of its potential returns per unit of risk. M3 Technology is currently generating about -0.19 per unit of risk. If you would invest 4,170 in Nan Ya Plastics on September 1, 2024 and sell it today you would lose (300.00) from holding Nan Ya Plastics or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nan Ya Plastics vs. M3 Technology
Performance |
| Timeline |
| Nan Ya Plastics |
| M3 Technology |
Nan Ya and M3 Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and M3 Technology
The main advantage of trading using opposite Nan Ya and M3 Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, M3 Technology 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 M3 Technology will offset losses from the drop in M3 Technology'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 |
| M3 Technology vs. Mercuries Life Insurance | M3 Technology vs. Sunmax Biotechnology Co | M3 Technology vs. Chung Lien Transportation | M3 Technology vs. Apex Biotechnology Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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