Correlation Between Taiwan Semiconductor and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Taiwan Semiconductor and Nan Ya 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 Taiwan Semiconductor and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Semiconductor Manufacturing and Nan Ya Plastics, you can compare the effects of market volatilities on Taiwan Semiconductor and Nan Ya 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 Taiwan Semiconductor with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Semiconductor and Nan Ya.
Diversification Opportunities for Taiwan Semiconductor and Nan Ya
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Nan is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu and Nan Ya Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Plastics and Taiwan Semiconductor 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 Taiwan Semiconductor Manufacturing are associated (or correlated) with Nan Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Ya Plastics has no effect on the direction of Taiwan Semiconductor i.e., Taiwan Semiconductor and Nan Ya go up and down completely randomly.
Pair Corralation between Taiwan Semiconductor and Nan Ya
Assuming the 90 days trading horizon Taiwan Semiconductor Manufacturing is expected to generate 0.86 times more return on investment than Nan Ya. However, Taiwan Semiconductor Manufacturing is 1.17 times less risky than Nan Ya. It trades about -0.12 of its potential returns per unit of risk. Nan Ya Plastics is currently generating about -0.16 per unit of risk. If you would invest 104,000 in Taiwan Semiconductor Manufacturing on August 30, 2024 and sell it today you would lose (4,000) from holding Taiwan Semiconductor Manufacturing or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Semiconductor Manufactu vs. Nan Ya Plastics
Performance |
| Timeline |
| Taiwan Semiconductor |
| Nan Ya Plastics |
Taiwan Semiconductor and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Semiconductor and Nan Ya
The main advantage of trading using opposite Taiwan Semiconductor and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Semiconductor position performs unexpectedly, Nan Ya 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 Nan Ya will offset losses from the drop in Nan Ya's long position.| Taiwan Semiconductor vs. United Microelectronics | Taiwan Semiconductor vs. Hon Hai Precision | Taiwan Semiconductor vs. MediaTek | Taiwan Semiconductor vs. Taiwan Semiconductor Manufacturing |
| Nan Ya vs. Formosa Plastics Corp | Nan Ya vs. Formosa Chemicals Fibre | Nan Ya vs. China Steel Corp | Nan Ya vs. Formosa Petrochemical Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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