Correlation Between Nan Ya and BenQ Materials
Can any of the company-specific risk be diversified away by investing in both Nan Ya and BenQ Materials 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 BenQ Materials 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 BenQ Materials Corp, you can compare the effects of market volatilities on Nan Ya and BenQ Materials 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 BenQ Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and BenQ Materials.
Diversification Opportunities for Nan Ya and BenQ Materials
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nan and BenQ is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and BenQ Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BenQ Materials Corp 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 BenQ Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BenQ Materials Corp has no effect on the direction of Nan Ya i.e., Nan Ya and BenQ Materials go up and down completely randomly.
Pair Corralation between Nan Ya and BenQ Materials
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the BenQ Materials. But the stock apears to be less risky and, when comparing its historical volatility, Nan Ya Plastics is 1.31 times less risky than BenQ Materials. The stock trades about -0.09 of its potential returns per unit of risk. The BenQ Materials Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,280 in BenQ Materials Corp on September 5, 2024 and sell it today you would lose (40.00) from holding BenQ Materials Corp or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Plastics vs. BenQ Materials Corp
Performance |
| Timeline |
| Nan Ya Plastics |
| BenQ Materials Corp |
Nan Ya and BenQ Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and BenQ Materials
The main advantage of trading using opposite Nan Ya and BenQ Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, BenQ Materials 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 BenQ Materials will offset losses from the drop in BenQ Materials' long position.The idea behind Nan Ya Plastics and BenQ Materials Corp 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.| BenQ Materials vs. Taiwan Semiconductor Manufacturing | BenQ Materials vs. Yang Ming Marine | BenQ Materials vs. AU Optronics | BenQ Materials 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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