Correlation Between Nankang Rubber and CKM Building
Can any of the company-specific risk be diversified away by investing in both Nankang Rubber and CKM Building 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 CKM Building 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 CKM Building Material, you can compare the effects of market volatilities on Nankang Rubber and CKM Building 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 CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and CKM Building.
Diversification Opportunities for Nankang Rubber and CKM Building
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nankang and CKM is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material 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 CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and CKM Building go up and down completely randomly.
Pair Corralation between Nankang Rubber and CKM Building
Assuming the 90 days trading horizon Nankang Rubber is expected to generate 3.32 times less return on investment than CKM Building. But when comparing it to its historical volatility, Nankang Rubber Tire is 1.29 times less risky than CKM Building. It trades about 0.03 of its potential returns per unit of risk. CKM Building Material is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,572 in CKM Building Material on November 19, 2024 and sell it today you would earn a total of 2,078 from holding CKM Building Material or generate 132.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nankang Rubber Tire vs. CKM Building Material
Performance |
| Timeline |
| Nankang Rubber Tire |
| CKM Building Material |
Nankang Rubber and CKM Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nankang Rubber and CKM Building
The main advantage of trading using opposite Nankang Rubber and CKM Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nankang Rubber position performs unexpectedly, CKM Building 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 CKM Building will offset losses from the drop in CKM Building'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 |
| CKM Building vs. Asia Metal Industries | CKM Building vs. Compal Broadband Networks | CKM Building vs. Healthconn Corp | CKM Building vs. Louisa Professional Coffee |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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