Correlation Between Lotes and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Lotes 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 Lotes and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotes Co and Nan Ya Printed, you can compare the effects of market volatilities on Lotes 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 Lotes with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotes and Nan Ya.
Diversification Opportunities for Lotes and Nan Ya
Very good diversification
The 3 months correlation between Lotes and Nan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lotes Co 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 Lotes 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 Lotes Co 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 Lotes i.e., Lotes and Nan Ya go up and down completely randomly.
Pair Corralation between Lotes and Nan Ya
Assuming the 90 days trading horizon Lotes Co is expected to generate 0.86 times more return on investment than Nan Ya. However, Lotes Co is 1.16 times less risky than Nan Ya. It trades about 0.09 of its potential returns per unit of risk. Nan Ya Printed is currently generating about -0.04 per unit of risk. If you would invest 183,000 in Lotes Co on November 5, 2024 and sell it today you would earn a total of 5,000 from holding Lotes Co or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotes Co vs. Nan Ya Printed
Performance |
| Timeline |
| Lotes |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Nan Ya Printed |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Lotes and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotes and Nan Ya
The main advantage of trading using opposite Lotes and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotes 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 Lotes Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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