Correlation Between Nantex Industry and San Fu
Can any of the company-specific risk be diversified away by investing in both Nantex Industry and San Fu 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 Nantex Industry and San Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nantex Industry Co and San Fu Chemical, you can compare the effects of market volatilities on Nantex Industry and San Fu 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 Nantex Industry with a short position of San Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nantex Industry and San Fu.
Diversification Opportunities for Nantex Industry and San Fu
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nantex and San is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nantex Industry Co and San Fu Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fu Chemical and Nantex Industry 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 Nantex Industry Co are associated (or correlated) with San Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fu Chemical has no effect on the direction of Nantex Industry i.e., Nantex Industry and San Fu go up and down completely randomly.
Pair Corralation between Nantex Industry and San Fu
Assuming the 90 days trading horizon Nantex Industry Co is expected to generate 0.46 times more return on investment than San Fu. However, Nantex Industry Co is 2.19 times less risky than San Fu. It trades about -0.48 of its potential returns per unit of risk. San Fu Chemical is currently generating about -0.3 per unit of risk. If you would invest 3,490 in Nantex Industry Co on November 5, 2024 and sell it today you would lose (200.00) from holding Nantex Industry Co or give up 5.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nantex Industry Co vs. San Fu Chemical
Performance |
| Timeline |
| Nantex Industry |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| San Fu Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nantex Industry and San Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nantex Industry and San Fu
The main advantage of trading using opposite Nantex Industry and San Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nantex Industry position performs unexpectedly, San Fu 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 San Fu will offset losses from the drop in San Fu's long position.The idea behind Nantex Industry Co and San Fu Chemical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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