Correlation Between Alchip Technologies and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Alchip Technologies 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 Alchip Technologies and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alchip Technologies and Nan Ya Printed, you can compare the effects of market volatilities on Alchip Technologies 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 Alchip Technologies with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alchip Technologies and Nan Ya.
Diversification Opportunities for Alchip Technologies and Nan Ya
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alchip and Nan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alchip Technologies 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 Alchip Technologies 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 Alchip Technologies 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 Alchip Technologies i.e., Alchip Technologies and Nan Ya go up and down completely randomly.
Pair Corralation between Alchip Technologies and Nan Ya
Assuming the 90 days trading horizon Alchip Technologies is expected to generate 1.61 times more return on investment than Nan Ya. However, Alchip Technologies is 1.61 times more volatile than Nan Ya Printed. 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 91,200 in Alchip Technologies on November 5, 2024 and sell it today you would earn a total of 221,800 from holding Alchip Technologies or generate 243.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alchip Technologies vs. Nan Ya Printed
Performance |
| Timeline |
| Alchip Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Nan Ya Printed |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Alchip Technologies and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alchip Technologies and Nan Ya
The main advantage of trading using opposite Alchip Technologies and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alchip Technologies 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 Alchip Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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