Correlation Between Nankang Rubber and Chaintech Technology
Can any of the company-specific risk be diversified away by investing in both Nankang Rubber and Chaintech Technology 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 Chaintech Technology 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 Chaintech Technology Corp, you can compare the effects of market volatilities on Nankang Rubber and Chaintech Technology 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 Chaintech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and Chaintech Technology.
Diversification Opportunities for Nankang Rubber and Chaintech Technology
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nankang and Chaintech is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and Chaintech Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaintech Technology Corp 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 Chaintech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaintech Technology Corp has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and Chaintech Technology go up and down completely randomly.
Pair Corralation between Nankang Rubber and Chaintech Technology
Assuming the 90 days trading horizon Nankang Rubber Tire is expected to generate 0.79 times more return on investment than Chaintech Technology. However, Nankang Rubber Tire is 1.26 times less risky than Chaintech Technology. It trades about 0.06 of its potential returns per unit of risk. Chaintech Technology Corp is currently generating about -0.02 per unit of risk. If you would invest 3,890 in Nankang Rubber Tire on September 3, 2024 and sell it today you would earn a total of 1,085 from holding Nankang Rubber Tire or generate 27.89% 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. Chaintech Technology Corp
Performance |
| Timeline |
| Nankang Rubber Tire |
| Chaintech Technology Corp |
Nankang Rubber and Chaintech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nankang Rubber and Chaintech Technology
The main advantage of trading using opposite Nankang Rubber and Chaintech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nankang Rubber position performs unexpectedly, Chaintech Technology 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 Chaintech Technology will offset losses from the drop in Chaintech Technology'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 |
| Chaintech Technology vs. Taiwan Semiconductor Manufacturing | Chaintech Technology vs. Yang Ming Marine | Chaintech Technology vs. ASE Industrial Holding | Chaintech Technology vs. AU Optronics |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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