Correlation Between Nankang Rubber and Jia Jie
Can any of the company-specific risk be diversified away by investing in both Nankang Rubber and Jia Jie 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 Jia Jie 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 Jia Jie Biomedical, you can compare the effects of market volatilities on Nankang Rubber and Jia Jie 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 Jia Jie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and Jia Jie.
Diversification Opportunities for Nankang Rubber and Jia Jie
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nankang and Jia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and Jia Jie Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jia Jie Biomedical 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 Jia Jie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jia Jie Biomedical has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and Jia Jie go up and down completely randomly.
Pair Corralation between Nankang Rubber and Jia Jie
Assuming the 90 days trading horizon Nankang Rubber Tire is expected to under-perform the Jia Jie. But the stock apears to be less risky and, when comparing its historical volatility, Nankang Rubber Tire is 1.38 times less risky than Jia Jie. The stock trades about -0.05 of its potential returns per unit of risk. The Jia Jie Biomedical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,131 in Jia Jie Biomedical on September 19, 2024 and sell it today you would earn a total of 59.00 from holding Jia Jie Biomedical or generate 2.77% 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. Jia Jie Biomedical
Performance |
Timeline |
Nankang Rubber Tire |
Jia Jie Biomedical |
Nankang Rubber and Jia Jie Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nankang Rubber and Jia Jie
The main advantage of trading using opposite Nankang Rubber and Jia Jie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nankang Rubber position performs unexpectedly, Jia Jie 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 Jia Jie will offset losses from the drop in Jia Jie's long position.Nankang Rubber vs. Feng Tay Enterprises | Nankang Rubber vs. Ruentex Development Co | Nankang Rubber vs. WiseChip Semiconductor | Nankang Rubber vs. Novatek Microelectronics Corp |
Jia Jie vs. Nankang Rubber Tire | Jia Jie vs. General Plastic Industrial | Jia Jie vs. Tigerair Taiwan Co | Jia Jie vs. Formosa International Hotels |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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