Correlation Between Solar Applied and Nankang Rubber
Can any of the company-specific risk be diversified away by investing in both Solar Applied 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 Solar Applied and Nankang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solar Applied Materials and Nankang Rubber Tire, you can compare the effects of market volatilities on Solar Applied 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 Solar Applied with a short position of Nankang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Applied and Nankang Rubber.
Diversification Opportunities for Solar Applied and Nankang Rubber
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Solar and Nankang is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Solar Applied Materials 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 Solar Applied 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 Solar Applied Materials 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 Solar Applied i.e., Solar Applied and Nankang Rubber go up and down completely randomly.
Pair Corralation between Solar Applied and Nankang Rubber
Assuming the 90 days trading horizon Solar Applied Materials is expected to generate 1.36 times more return on investment than Nankang Rubber. However, Solar Applied is 1.36 times more volatile than Nankang Rubber Tire. It trades about 0.06 of its potential returns per unit of risk. Nankang Rubber Tire is currently generating about -0.06 per unit of risk. If you would invest 4,885 in Solar Applied Materials on August 31, 2024 and sell it today you would earn a total of 1,065 from holding Solar Applied Materials or generate 21.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solar Applied Materials vs. Nankang Rubber Tire
Performance |
| Timeline |
| Solar Applied Materials |
| Nankang Rubber Tire |
Solar Applied and Nankang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solar Applied and Nankang Rubber
The main advantage of trading using opposite Solar Applied and Nankang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solar Applied 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.| Solar Applied vs. Wafer Works | Solar Applied vs. Sino American Silicon Products | Solar Applied vs. StShine Optical Co | Solar Applied vs. Phison Electronics |
| Nankang Rubber vs. Yulon Motor Co | Nankang Rubber vs. Federal Corp | Nankang Rubber vs. Kenda Rubber Industrial | Nankang Rubber vs. Taiwan Glass Ind |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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