Correlation Between Elite Material and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Elite Material 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 Elite Material and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Material Co and Nan Ya Printed, you can compare the effects of market volatilities on Elite Material 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 Elite Material with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Material and Nan Ya.
Diversification Opportunities for Elite Material and Nan Ya
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elite and Nan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Elite Material Co and Nan Ya Printed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Printed and Elite Material 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 Elite Material Co 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 Printed has no effect on the direction of Elite Material i.e., Elite Material and Nan Ya go up and down completely randomly.
Pair Corralation between Elite Material and Nan Ya
Assuming the 90 days trading horizon Elite Material Co is expected to generate 1.34 times more return on investment than Nan Ya. However, Elite Material is 1.34 times more volatile than Nan Ya Printed. It trades about 0.42 of its potential returns per unit of risk. Nan Ya Printed is currently generating about -0.3 per unit of risk. If you would invest 43,500 in Elite Material Co on September 12, 2024 and sell it today you would earn a total of 11,900 from holding Elite Material Co or generate 27.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Material Co vs. Nan Ya Printed
Performance |
| Timeline |
| Elite Material |
| Nan Ya Printed |
Elite Material and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Material and Nan Ya
The main advantage of trading using opposite Elite Material and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Material 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.| Elite Material vs. AU Optronics | Elite Material vs. Innolux Corp | Elite Material vs. Ruentex Development Co | Elite Material vs. WiseChip Semiconductor |
| Nan Ya vs. AU Optronics | Nan Ya vs. Innolux Corp | Nan Ya vs. Ruentex Development Co | Nan Ya vs. WiseChip Semiconductor |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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