Correlation Between Sinphar Pharmaceutical and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Sinphar Pharmaceutical 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 Sinphar Pharmaceutical and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinphar Pharmaceutical Co and Nan Ya Plastics, you can compare the effects of market volatilities on Sinphar Pharmaceutical 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 Sinphar Pharmaceutical with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinphar Pharmaceutical and Nan Ya.
Diversification Opportunities for Sinphar Pharmaceutical and Nan Ya
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sinphar and Nan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sinphar Pharmaceutical Co 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 Sinphar Pharmaceutical 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 Sinphar Pharmaceutical Co 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 Sinphar Pharmaceutical i.e., Sinphar Pharmaceutical and Nan Ya go up and down completely randomly.
Pair Corralation between Sinphar Pharmaceutical and Nan Ya
Assuming the 90 days trading horizon Sinphar Pharmaceutical Co is expected to generate 0.35 times more return on investment than Nan Ya. However, Sinphar Pharmaceutical Co is 2.85 times less risky than Nan Ya. It trades about 0.02 of its potential returns per unit of risk. Nan Ya Plastics is currently generating about -0.19 per unit of risk. If you would invest 3,080 in Sinphar Pharmaceutical Co on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Sinphar Pharmaceutical Co or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinphar Pharmaceutical Co vs. Nan Ya Plastics
Performance |
| Timeline |
| Sinphar Pharmaceutical |
| Nan Ya Plastics |
Sinphar Pharmaceutical and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinphar Pharmaceutical and Nan Ya
The main advantage of trading using opposite Sinphar Pharmaceutical and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinphar Pharmaceutical 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.| Sinphar Pharmaceutical vs. Taiwan Semiconductor Manufacturing | Sinphar Pharmaceutical vs. Hon Hai Precision | Sinphar Pharmaceutical vs. MediaTek | Sinphar Pharmaceutical vs. Chunghwa Telecom Co |
| Nan Ya vs. Formosa Plastics Corp | Nan Ya vs. Formosa Chemicals Fibre | Nan Ya vs. China Steel Corp | Nan Ya vs. Formosa Petrochemical 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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