Correlation Between Nankang Rubber and Formosan Rubber
Can any of the company-specific risk be diversified away by investing in both Nankang Rubber and Formosan 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 Nankang Rubber and Formosan Rubber 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 Formosan Rubber Group, you can compare the effects of market volatilities on Nankang Rubber and Formosan 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 Nankang Rubber with a short position of Formosan Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and Formosan Rubber.
Diversification Opportunities for Nankang Rubber and Formosan Rubber
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nankang and Formosan is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and Formosan Rubber Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosan Rubber Group 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 Formosan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosan Rubber Group has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and Formosan Rubber go up and down completely randomly.
Pair Corralation between Nankang Rubber and Formosan Rubber
Assuming the 90 days trading horizon Nankang Rubber Tire is expected to under-perform the Formosan Rubber. In addition to that, Nankang Rubber is 1.92 times more volatile than Formosan Rubber Group. It trades about -0.25 of its total potential returns per unit of risk. Formosan Rubber Group is currently generating about -0.09 per unit of volatility. If you would invest 2,605 in Formosan Rubber Group on October 19, 2024 and sell it today you would lose (35.00) from holding Formosan Rubber Group or give up 1.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nankang Rubber Tire vs. Formosan Rubber Group
Performance |
| Timeline |
| Nankang Rubber Tire |
| Formosan Rubber Group |
Nankang Rubber and Formosan Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nankang Rubber and Formosan Rubber
The main advantage of trading using opposite Nankang Rubber and Formosan Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nankang Rubber position performs unexpectedly, Formosan 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 Formosan Rubber will offset losses from the drop in Formosan Rubber's 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 |
| Formosan Rubber vs. Nankang Rubber Tire | Formosan Rubber vs. Federal Corp | Formosan Rubber vs. Kenda Rubber Industrial | Formosan Rubber vs. Yulon Motor 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |