Correlation Between Yem Chio and Nankang Rubber
Can any of the company-specific risk be diversified away by investing in both Yem Chio 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 Yem Chio and Nankang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yem Chio Co and Nankang Rubber Tire, you can compare the effects of market volatilities on Yem Chio 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 Yem Chio with a short position of Nankang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yem Chio and Nankang Rubber.
Diversification Opportunities for Yem Chio and Nankang Rubber
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yem and Nankang is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Yem Chio 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 Yem Chio 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 Yem Chio 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 Yem Chio i.e., Yem Chio and Nankang Rubber go up and down completely randomly.
Pair Corralation between Yem Chio and Nankang Rubber
Assuming the 90 days trading horizon Yem Chio is expected to generate 1.66 times less return on investment than Nankang Rubber. But when comparing it to its historical volatility, Yem Chio Co is 1.2 times less risky than Nankang Rubber. It trades about 0.04 of its potential returns per unit of risk. Nankang Rubber Tire is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,425 in Nankang Rubber Tire on September 3, 2024 and sell it today you would earn a total of 1,485 from holding Nankang Rubber Tire or generate 43.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yem Chio Co vs. Nankang Rubber Tire
Performance |
| Timeline |
| Yem Chio |
| Nankang Rubber Tire |
Yem Chio and Nankang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yem Chio and Nankang Rubber
The main advantage of trading using opposite Yem Chio and Nankang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yem Chio 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.| Yem Chio vs. USI Corp | Yem Chio vs. Asia Polymer Corp | Yem Chio vs. Sincere Navigation Corp | Yem Chio vs. Lealea Enterprise Co |
| Nankang Rubber vs. Tainan Spinning Co | Nankang Rubber vs. Chia Her Industrial | Nankang Rubber vs. WiseChip Semiconductor | Nankang Rubber vs. Novatek Microelectronics Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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