Correlation Between Hua Nan and Pan Asia
Can any of the company-specific risk be diversified away by investing in both Hua Nan and Pan Asia 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 Hua Nan and Pan Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Nan Financial and Pan Asia Chemical, you can compare the effects of market volatilities on Hua Nan and Pan Asia 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 Hua Nan with a short position of Pan Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Nan and Pan Asia.
Diversification Opportunities for Hua Nan and Pan Asia
Good diversification
The 3 months correlation between Hua and Pan is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hua Nan Financial and Pan Asia Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Asia Chemical and Hua Nan 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 Hua Nan Financial are associated (or correlated) with Pan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Asia Chemical has no effect on the direction of Hua Nan i.e., Hua Nan and Pan Asia go up and down completely randomly.
Pair Corralation between Hua Nan and Pan Asia
Assuming the 90 days trading horizon Hua Nan Financial is expected to generate 1.42 times more return on investment than Pan Asia. However, Hua Nan is 1.42 times more volatile than Pan Asia Chemical. It trades about 0.31 of its potential returns per unit of risk. Pan Asia Chemical is currently generating about -0.09 per unit of risk. If you would invest 2,545 in Hua Nan Financial on September 14, 2024 and sell it today you would earn a total of 175.00 from holding Hua Nan Financial or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Nan Financial vs. Pan Asia Chemical
Performance |
| Timeline |
| Hua Nan Financial |
| Pan Asia Chemical |
Hua Nan and Pan Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Nan and Pan Asia
The main advantage of trading using opposite Hua Nan and Pan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Nan position performs unexpectedly, Pan Asia 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 Pan Asia will offset losses from the drop in Pan Asia's long position.| Hua Nan vs. Central Reinsurance Corp | Hua Nan vs. Huaku Development Co | Hua Nan vs. Fubon Financial Holding | Hua Nan vs. Chailease Holding Co |
| Pan Asia vs. Yong Shun Chemical | Pan Asia vs. AVerMedia Technologies | Pan Asia vs. Shinkong Insurance Co | Pan Asia vs. Hua Nan Financial |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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