Correlation Between Chung Hsin and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Chung Hsin 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 Hsin 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 Hsin Electric Machinery and Nan Ya Plastics, you can compare the effects of market volatilities on Chung Hsin 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 Hsin with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Nan Ya.
Diversification Opportunities for Chung Hsin and Nan Ya
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Nan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Nan Ya Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Plastics and Chung Hsin 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 Hsin Electric Machinery 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 Plastics has no effect on the direction of Chung Hsin i.e., Chung Hsin and Nan Ya go up and down completely randomly.
Pair Corralation between Chung Hsin and Nan Ya
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 1.98 times more return on investment than Nan Ya. However, Chung Hsin is 1.98 times more volatile than Nan Ya Plastics. It trades about 0.04 of its potential returns per unit of risk. Nan Ya Plastics is currently generating about -0.12 per unit of risk. If you would invest 11,550 in Chung Hsin Electric Machinery on August 31, 2024 and sell it today you would earn a total of 4,250 from holding Chung Hsin Electric Machinery or generate 36.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Nan Ya Plastics
Performance |
| Timeline |
| Chung Hsin Electric |
| Nan Ya Plastics |
Chung Hsin and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Nan Ya
The main advantage of trading using opposite Chung Hsin and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin 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 Hsin vs. BES Engineering Co | Chung Hsin vs. Continental Holdings Corp | Chung Hsin vs. Kee Tai Properties | Chung Hsin vs. Hung Sheng Construction |
| Nan Ya vs. Basso Industry Corp | Nan Ya vs. Chung Hsin Electric Machinery | Nan Ya vs. TYC Brother Industrial | Nan Ya vs. TECO Electric Machinery |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |