Correlation Between China General and Nan Pao
Can any of the company-specific risk be diversified away by investing in both China General and Nan Pao 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 China General and Nan Pao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China General Plastics and Nan Pao Resins, you can compare the effects of market volatilities on China General and Nan Pao 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 China General with a short position of Nan Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of China General and Nan Pao.
Diversification Opportunities for China General and Nan Pao
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Nan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China General Plastics and Nan Pao Resins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Pao Resins and China General 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 China General Plastics are associated (or correlated) with Nan Pao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Pao Resins has no effect on the direction of China General i.e., China General and Nan Pao go up and down completely randomly.
Pair Corralation between China General and Nan Pao
Assuming the 90 days trading horizon China General is expected to generate 2.18 times less return on investment than Nan Pao. In addition to that, China General is 2.2 times more volatile than Nan Pao Resins. It trades about 0.04 of its total potential returns per unit of risk. Nan Pao Resins is currently generating about 0.17 per unit of volatility. If you would invest 31,100 in Nan Pao Resins on October 28, 2024 and sell it today you would earn a total of 1,300 from holding Nan Pao Resins or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China General Plastics vs. Nan Pao Resins
Performance |
| Timeline |
| China General Plastics |
| Nan Pao Resins |
China General and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China General and Nan Pao
The main advantage of trading using opposite China General and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China General position performs unexpectedly, Nan Pao 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 Nan Pao will offset losses from the drop in Nan Pao's long position.| China General vs. Asia Polymer Corp | China General vs. USI Corp | China General vs. Grand Pacific Petrochemical | China General vs. Taiwan Styrene Monomer |
| Nan Pao vs. Niko Semiconductor Co | Nan Pao vs. WIN Semiconductors | Nan Pao vs. Davicom Semiconductor | Nan Pao vs. Orient Semiconductor Electronics |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |