Correlation Between Nanya Technology and King Yuan
Can any of the company-specific risk be diversified away by investing in both Nanya Technology and King Yuan 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 Nanya Technology and King Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nanya Technology Corp and King Yuan Electronics, you can compare the effects of market volatilities on Nanya Technology and King Yuan 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 Nanya Technology with a short position of King Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanya Technology and King Yuan.
Diversification Opportunities for Nanya Technology and King Yuan
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nanya and King is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nanya Technology Corp and King Yuan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Yuan Electronics and Nanya Technology 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 Nanya Technology Corp are associated (or correlated) with King Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Yuan Electronics has no effect on the direction of Nanya Technology i.e., Nanya Technology and King Yuan go up and down completely randomly.
Pair Corralation between Nanya Technology and King Yuan
Assuming the 90 days trading horizon Nanya Technology Corp is expected to generate 1.4 times more return on investment than King Yuan. However, Nanya Technology is 1.4 times more volatile than King Yuan Electronics. It trades about 0.19 of its potential returns per unit of risk. King Yuan Electronics is currently generating about 0.01 per unit of risk. If you would invest 2,765 in Nanya Technology Corp on November 4, 2024 and sell it today you would earn a total of 245.00 from holding Nanya Technology Corp or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanya Technology Corp vs. King Yuan Electronics
Performance |
| Timeline |
| Nanya Technology Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| King Yuan Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nanya Technology and King Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanya Technology and King Yuan
The main advantage of trading using opposite Nanya Technology and King Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanya Technology position performs unexpectedly, King Yuan 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 King Yuan will offset losses from the drop in King Yuan's long position.The idea behind Nanya Technology Corp and King Yuan Electronics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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