Correlation Between Powertech Industrial and Nankang Rubber
Can any of the company-specific risk be diversified away by investing in both Powertech Industrial and Nankang Rubber 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 Powertech Industrial and Nankang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powertech Industrial Co and Nankang Rubber Tire, you can compare the effects of market volatilities on Powertech Industrial and Nankang Rubber 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 Powertech Industrial with a short position of Nankang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Industrial and Nankang Rubber.
Diversification Opportunities for Powertech Industrial and Nankang Rubber
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Powertech and Nankang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial Co and Nankang Rubber Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nankang Rubber Tire and Powertech Industrial 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 Powertech Industrial Co are associated (or correlated) with Nankang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nankang Rubber Tire has no effect on the direction of Powertech Industrial i.e., Powertech Industrial and Nankang Rubber go up and down completely randomly.
Pair Corralation between Powertech Industrial and Nankang Rubber
Assuming the 90 days trading horizon Powertech Industrial Co is expected to generate 1.55 times more return on investment than Nankang Rubber. However, Powertech Industrial is 1.55 times more volatile than Nankang Rubber Tire. It trades about 0.05 of its potential returns per unit of risk. Nankang Rubber Tire is currently generating about 0.03 per unit of risk. If you would invest 1,790 in Powertech Industrial Co on November 19, 2024 and sell it today you would earn a total of 1,030 from holding Powertech Industrial Co or generate 57.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powertech Industrial Co vs. Nankang Rubber Tire
Performance |
| Timeline |
| Powertech Industrial |
| Nankang Rubber Tire |
Powertech Industrial and Nankang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powertech Industrial and Nankang Rubber
The main advantage of trading using opposite Powertech Industrial and Nankang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Industrial position performs unexpectedly, Nankang Rubber 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 Nankang Rubber will offset losses from the drop in Nankang Rubber's long position.| Powertech Industrial vs. Leader Electronics | Powertech Industrial vs. Darwin Precisions Corp | Powertech Industrial vs. Silitech Technology Corp | Powertech Industrial vs. Altek Corp |
| Nankang Rubber vs. Yulon Motor Co | Nankang Rubber vs. Federal Corp | Nankang Rubber vs. Kenda Rubber Industrial | Nankang Rubber vs. Taiwan Glass Ind |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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