Correlation Between Nankang Rubber and Chicony Power
Can any of the company-specific risk be diversified away by investing in both Nankang Rubber and Chicony Power 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 Chicony Power 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 Chicony Power Technology, you can compare the effects of market volatilities on Nankang Rubber and Chicony Power 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 Chicony Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and Chicony Power.
Diversification Opportunities for Nankang Rubber and Chicony Power
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nankang and Chicony is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and Chicony Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Power Technology 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 Chicony Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Power Technology has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and Chicony Power go up and down completely randomly.
Pair Corralation between Nankang Rubber and Chicony Power
Assuming the 90 days trading horizon Nankang Rubber Tire is expected to generate 1.19 times more return on investment than Chicony Power. However, Nankang Rubber is 1.19 times more volatile than Chicony Power Technology. It trades about 0.0 of its potential returns per unit of risk. Chicony Power Technology is currently generating about -0.06 per unit of risk. If you would invest 4,765 in Nankang Rubber Tire on August 31, 2024 and sell it today you would lose (30.00) from holding Nankang Rubber Tire or give up 0.63% 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. Chicony Power Technology
Performance |
| Timeline |
| Nankang Rubber Tire |
| Chicony Power Technology |
Nankang Rubber and Chicony Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nankang Rubber and Chicony Power
The main advantage of trading using opposite Nankang Rubber and Chicony Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nankang Rubber position performs unexpectedly, Chicony Power 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 Chicony Power will offset losses from the drop in Chicony Power'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 |
| Chicony Power vs. Nankang Rubber Tire | Chicony Power vs. Taiwan Cooperative Financial | Chicony Power vs. Sinopac Financial Holdings | Chicony Power vs. Gloria Material Technology |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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