Correlation Between Sunmax Biotechnology and Nankang Rubber
Can any of the company-specific risk be diversified away by investing in both Sunmax Biotechnology 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 Sunmax Biotechnology and Nankang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunmax Biotechnology Co and Nankang Rubber Tire, you can compare the effects of market volatilities on Sunmax Biotechnology 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 Sunmax Biotechnology with a short position of Nankang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunmax Biotechnology and Nankang Rubber.
Diversification Opportunities for Sunmax Biotechnology and Nankang Rubber
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sunmax and Nankang is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sunmax Biotechnology 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 Sunmax Biotechnology 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 Sunmax Biotechnology 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 Sunmax Biotechnology i.e., Sunmax Biotechnology and Nankang Rubber go up and down completely randomly.
Pair Corralation between Sunmax Biotechnology and Nankang Rubber
Assuming the 90 days trading horizon Sunmax Biotechnology Co is expected to generate 0.45 times more return on investment than Nankang Rubber. However, Sunmax Biotechnology Co is 2.21 times less risky than Nankang Rubber. It trades about 0.23 of its potential returns per unit of risk. Nankang Rubber Tire is currently generating about 0.06 per unit of risk. If you would invest 27,150 in Sunmax Biotechnology Co on September 4, 2024 and sell it today you would earn a total of 1,300 from holding Sunmax Biotechnology Co or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunmax Biotechnology Co vs. Nankang Rubber Tire
Performance |
| Timeline |
| Sunmax Biotechnology |
| Nankang Rubber Tire |
Sunmax Biotechnology and Nankang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunmax Biotechnology and Nankang Rubber
The main advantage of trading using opposite Sunmax Biotechnology and Nankang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunmax Biotechnology 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.| Sunmax Biotechnology vs. Symtek Automation Asia | Sunmax Biotechnology vs. WiseChip Semiconductor | Sunmax Biotechnology vs. Novatek Microelectronics Corp | Sunmax Biotechnology vs. Leader Electronics |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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