Correlation Between Nankang Rubber and Cheng Shin
Can any of the company-specific risk be diversified away by investing in both Nankang Rubber and Cheng Shin 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 Cheng Shin 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 Cheng Shin Rubber, you can compare the effects of market volatilities on Nankang Rubber and Cheng Shin 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 Cheng Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and Cheng Shin.
Diversification Opportunities for Nankang Rubber and Cheng Shin
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nankang and Cheng is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and Cheng Shin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Shin Rubber 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 Cheng Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Shin Rubber has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and Cheng Shin go up and down completely randomly.
Pair Corralation between Nankang Rubber and Cheng Shin
Assuming the 90 days trading horizon Nankang Rubber is expected to generate 1.06 times less return on investment than Cheng Shin. In addition to that, Nankang Rubber is 1.06 times more volatile than Cheng Shin Rubber. It trades about 0.05 of its total potential returns per unit of risk. Cheng Shin Rubber is currently generating about 0.06 per unit of volatility. If you would invest 3,410 in Cheng Shin Rubber on September 3, 2024 and sell it today you would earn a total of 1,650 from holding Cheng Shin Rubber or generate 48.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nankang Rubber Tire vs. Cheng Shin Rubber
Performance |
| Timeline |
| Nankang Rubber Tire |
| Cheng Shin Rubber |
Nankang Rubber and Cheng Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nankang Rubber and Cheng Shin
The main advantage of trading using opposite Nankang Rubber and Cheng Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nankang Rubber position performs unexpectedly, Cheng Shin 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 Cheng Shin will offset losses from the drop in Cheng Shin's long position.| Nankang Rubber vs. Tainan Spinning Co | Nankang Rubber vs. Chia Her Industrial | Nankang Rubber vs. WiseChip Semiconductor | Nankang Rubber vs. Novatek Microelectronics Corp |
| Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Formosa Chemicals Fibre | Cheng Shin vs. Asia Cement Corp | Cheng Shin vs. Pou Chen 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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