Correlation Between Chia Her and Nankang Rubber
Can any of the company-specific risk be diversified away by investing in both Chia Her and Nankang Rubber 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 Chia Her and Nankang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia Her Industrial and Nankang Rubber Tire, you can compare the effects of market volatilities on Chia Her and Nankang Rubber 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 Chia Her with a short position of Nankang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Her and Nankang Rubber.
Diversification Opportunities for Chia Her and Nankang Rubber
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chia and Nankang is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chia Her Industrial and Nankang Rubber Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nankang Rubber Tire and Chia Her 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 Chia Her Industrial are associated (or correlated) with Nankang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nankang Rubber Tire has no effect on the direction of Chia Her i.e., Chia Her and Nankang Rubber go up and down completely randomly.
Pair Corralation between Chia Her and Nankang Rubber
Assuming the 90 days trading horizon Chia Her Industrial is expected to generate 1.45 times more return on investment than Nankang Rubber. However, Chia Her is 1.45 times more volatile than Nankang Rubber Tire. It trades about 0.08 of its potential returns per unit of risk. Nankang Rubber Tire is currently generating about -0.05 per unit of risk. If you would invest 1,755 in Chia Her Industrial on September 3, 2024 and sell it today you would earn a total of 620.00 from holding Chia Her Industrial or generate 35.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chia Her Industrial vs. Nankang Rubber Tire
Performance |
| Timeline |
| Chia Her Industrial |
| Nankang Rubber Tire |
Chia Her and Nankang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia Her and Nankang Rubber
The main advantage of trading using opposite Chia Her and Nankang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Her position performs unexpectedly, Nankang Rubber 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 Nankang Rubber will offset losses from the drop in Nankang Rubber's long position.| Chia Her vs. Carnival Industrial Corp | Chia Her vs. I Hwa Industrial Co | Chia Her vs. Hung Chou Fiber | Chia Her vs. Tung Ho Textile |
| Nankang Rubber vs. Tainan Spinning Co | Nankang Rubber vs. Chia Her Industrial | Nankang Rubber vs. WiseChip Semiconductor | Nankang Rubber vs. Novatek Microelectronics 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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