Correlation Between Nankang Rubber and Ocean Plastics
Can any of the company-specific risk be diversified away by investing in both Nankang Rubber and Ocean Plastics 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 Nankang Rubber and Ocean Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nankang Rubber Tire and Ocean Plastics Co, you can compare the effects of market volatilities on Nankang Rubber and Ocean Plastics 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 Nankang Rubber with a short position of Ocean Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and Ocean Plastics.
Diversification Opportunities for Nankang Rubber and Ocean Plastics
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nankang and Ocean is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and Ocean Plastics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Plastics and Nankang Rubber 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 Nankang Rubber Tire are associated (or correlated) with Ocean Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Plastics has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and Ocean Plastics go up and down completely randomly.
Pair Corralation between Nankang Rubber and Ocean Plastics
Assuming the 90 days trading horizon Nankang Rubber Tire is expected to generate 1.16 times more return on investment than Ocean Plastics. However, Nankang Rubber is 1.16 times more volatile than Ocean Plastics Co. It trades about 0.16 of its potential returns per unit of risk. Ocean Plastics Co is currently generating about 0.07 per unit of risk. If you would invest 4,555 in Nankang Rubber Tire on December 1, 2024 and sell it today you would earn a total of 180.00 from holding Nankang Rubber Tire or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nankang Rubber Tire vs. Ocean Plastics Co
Performance |
| Timeline |
| Nankang Rubber Tire |
| Ocean Plastics |
Nankang Rubber and Ocean Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nankang Rubber and Ocean Plastics
The main advantage of trading using opposite Nankang Rubber and Ocean Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nankang Rubber position performs unexpectedly, Ocean Plastics 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 Ocean Plastics will offset losses from the drop in Ocean Plastics' long position.| Nankang Rubber vs. Yulon Motor Co | Nankang Rubber vs. Federal Corp | Nankang Rubber vs. Kenda Rubber Industrial | Nankang Rubber vs. Taiwan Glass Ind |
| Ocean Plastics vs. San Fang Chemical | Ocean Plastics vs. Taita Chemical Co | Ocean Plastics vs. Tah Hsin Industrial | Ocean Plastics vs. Yonyu Plastics Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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