Correlation Between Eternal Materials and Nan Pao
Can any of the company-specific risk be diversified away by investing in both Eternal Materials 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 Eternal Materials and Nan Pao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Nan Pao Resins, you can compare the effects of market volatilities on Eternal Materials 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 Eternal Materials with a short position of Nan Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Nan Pao.
Diversification Opportunities for Eternal Materials and Nan Pao
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eternal and Nan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co 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 Eternal Materials 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 Eternal Materials Co 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 Eternal Materials i.e., Eternal Materials and Nan Pao go up and down completely randomly.
Pair Corralation between Eternal Materials and Nan Pao
Assuming the 90 days trading horizon Eternal Materials is expected to generate 15.14 times less return on investment than Nan Pao. But when comparing it to its historical volatility, Eternal Materials Co is 1.22 times less risky than Nan Pao. It trades about 0.01 of its potential returns per unit of risk. Nan Pao Resins is currently generating about 0.17 of returns per unit of risk over similar time horizon. 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 |
Eternal Materials Co vs. Nan Pao Resins
Performance |
| Timeline |
| Eternal Materials |
| Nan Pao Resins |
Eternal Materials and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Nan Pao
The main advantage of trading using opposite Eternal Materials and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials 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.| Eternal Materials vs. Taiwan Fertilizer Co | Eternal Materials vs. Nan Ya Plastics | Eternal Materials vs. Formosa Chemicals Fibre | Eternal Materials vs. Far Eastern New |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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