Correlation Between WIN Semiconductors and Nan Pao
Can any of the company-specific risk be diversified away by investing in both WIN Semiconductors and Nan Pao 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 WIN Semiconductors and Nan Pao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WIN Semiconductors and Nan Pao Resins, you can compare the effects of market volatilities on WIN Semiconductors and Nan Pao 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 WIN Semiconductors with a short position of Nan Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIN Semiconductors and Nan Pao.
Diversification Opportunities for WIN Semiconductors and Nan Pao
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WIN and Nan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding WIN Semiconductors and Nan Pao Resins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Pao Resins and WIN Semiconductors 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 WIN Semiconductors are associated (or correlated) with Nan Pao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Pao Resins has no effect on the direction of WIN Semiconductors i.e., WIN Semiconductors and Nan Pao go up and down completely randomly.
Pair Corralation between WIN Semiconductors and Nan Pao
Assuming the 90 days trading horizon WIN Semiconductors is expected to under-perform the Nan Pao. In addition to that, WIN Semiconductors is 1.14 times more volatile than Nan Pao Resins. It trades about -0.12 of its total potential returns per unit of risk. Nan Pao Resins is currently generating about 0.14 per unit of volatility. If you would invest 28,500 in Nan Pao Resins on November 6, 2024 and sell it today you would earn a total of 3,900 from holding Nan Pao Resins or generate 13.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WIN Semiconductors vs. Nan Pao Resins
Performance |
| Timeline |
| WIN Semiconductors |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nan Pao Resins |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
WIN Semiconductors and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WIN Semiconductors and Nan Pao
The main advantage of trading using opposite WIN Semiconductors and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIN Semiconductors position performs unexpectedly, Nan Pao 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 Pao will offset losses from the drop in Nan Pao's long position.The idea behind WIN Semiconductors and Nan Pao Resins 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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