Correlation Between San Fu and Nan Ya
Can any of the company-specific risk be diversified away by investing in both San Fu 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 San Fu and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Fu Chemical and Nan Ya Plastics, you can compare the effects of market volatilities on San Fu 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 San Fu with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Fu and Nan Ya.
Diversification Opportunities for San Fu and Nan Ya
Significant diversification
The 3 months correlation between San and Nan is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding San Fu Chemical and Nan Ya Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Plastics and San Fu 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 San Fu Chemical 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 Plastics has no effect on the direction of San Fu i.e., San Fu and Nan Ya go up and down completely randomly.
Pair Corralation between San Fu and Nan Ya
Assuming the 90 days trading horizon San Fu Chemical is expected to under-perform the Nan Ya. But the stock apears to be less risky and, when comparing its historical volatility, San Fu Chemical is 1.67 times less risky than Nan Ya. The stock trades about -0.15 of its potential returns per unit of risk. The Nan Ya Plastics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,100 in Nan Ya Plastics on October 28, 2024 and sell it today you would earn a total of 135.00 from holding Nan Ya Plastics or generate 4.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
San Fu Chemical vs. Nan Ya Plastics
Performance |
Timeline |
San Fu Chemical |
Nan Ya Plastics |
San Fu and Nan Ya Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with San Fu and Nan Ya
The main advantage of trading using opposite San Fu and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu 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.San Fu vs. Nan Ya Plastics | San Fu vs. China Petrochemical Development | San Fu vs. Eternal Materials Co | San Fu vs. TSRC Corp |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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