Correlation Between Global Unichip and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Global Unichip 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 Global Unichip and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Unichip Corp and Nan Ya Printed, you can compare the effects of market volatilities on Global Unichip 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 Global Unichip with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Unichip and Nan Ya.
Diversification Opportunities for Global Unichip and Nan Ya
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Nan is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp 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 Global Unichip 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 Global Unichip Corp 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 Global Unichip i.e., Global Unichip and Nan Ya go up and down completely randomly.
Pair Corralation between Global Unichip and Nan Ya
Assuming the 90 days trading horizon Global Unichip Corp is expected to generate 1.57 times more return on investment than Nan Ya. However, Global Unichip is 1.57 times more volatile than Nan Ya Printed. It trades about 0.04 of its potential returns per unit of risk. Nan Ya Printed is currently generating about -0.07 per unit of risk. If you would invest 79,400 in Global Unichip Corp on August 30, 2024 and sell it today you would earn a total of 38,600 from holding Global Unichip Corp or generate 48.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Unichip Corp vs. Nan Ya Printed
Performance |
| Timeline |
| Global Unichip Corp |
| Nan Ya Printed |
Global Unichip and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Unichip and Nan Ya
The main advantage of trading using opposite Global Unichip and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Unichip 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.The idea behind Global Unichip Corp and Nan Ya Printed 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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