Correlation Between Chung Fu and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Chung Fu and Nan Ya 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 Chung Fu and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Fu Tex International and Nan Ya Printed, you can compare the effects of market volatilities on Chung Fu and Nan Ya 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 Chung Fu with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Fu and Nan Ya.
Diversification Opportunities for Chung Fu and Nan Ya
Poor diversification
The 3 months correlation between Chung and Nan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chung Fu Tex International and Nan Ya Printed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Printed and Chung Fu 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 Chung Fu Tex International are associated (or correlated) with Nan Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Ya Printed has no effect on the direction of Chung Fu i.e., Chung Fu and Nan Ya go up and down completely randomly.
Pair Corralation between Chung Fu and Nan Ya
Assuming the 90 days trading horizon Chung Fu Tex International is expected to under-perform the Nan Ya. But the stock apears to be less risky and, when comparing its historical volatility, Chung Fu Tex International is 1.24 times less risky than Nan Ya. The stock trades about -0.17 of its potential returns per unit of risk. The Nan Ya Printed is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 13,000 in Nan Ya Printed on August 30, 2024 and sell it today you would lose (950.00) from holding Nan Ya Printed or give up 7.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chung Fu Tex International vs. Nan Ya Printed
Performance |
| Timeline |
| Chung Fu Tex |
| Nan Ya Printed |
Chung Fu and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Fu and Nan Ya
The main advantage of trading using opposite Chung Fu and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Fu position performs unexpectedly, Nan Ya 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 Ya will offset losses from the drop in Nan Ya's long position.| Chung Fu vs. Maxigen Biotech | Chung Fu vs. United Radiant Technology | Chung Fu vs. Microelectronics Technology | Chung Fu vs. Sun Max Tech |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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