Correlation Between San Fu and Nan Pao
Can any of the company-specific risk be diversified away by investing in both San Fu and Nan Pao 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 Pao 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 Pao Resins, you can compare the effects of market volatilities on San Fu and Nan Pao 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 Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Fu and Nan Pao.
Diversification Opportunities for San Fu and Nan Pao
Good diversification
The 3 months correlation between San and Nan is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding San Fu Chemical and Nan Pao Resins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Pao Resins 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 Pao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Pao Resins has no effect on the direction of San Fu i.e., San Fu and Nan Pao go up and down completely randomly.
Pair Corralation between San Fu and Nan Pao
Assuming the 90 days trading horizon San Fu is expected to generate 16.32 times less return on investment than Nan Pao. But when comparing it to its historical volatility, San Fu Chemical is 1.03 times less risky than Nan Pao. It trades about 0.01 of its potential returns per unit of risk. Nan Pao Resins is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13,750 in Nan Pao Resins on November 19, 2024 and sell it today you would earn a total of 20,050 from holding Nan Pao Resins or generate 145.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Fu Chemical vs. Nan Pao Resins
Performance |
| Timeline |
| San Fu Chemical |
| Nan Pao Resins |
San Fu and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Fu and Nan Pao
The main advantage of trading using opposite San Fu and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu position performs unexpectedly, Nan Pao 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 Pao will offset losses from the drop in Nan Pao's long position.| San Fu vs. Nuvoton Technology Corp | San Fu vs. Shiny Chemical Industrial | San Fu vs. Jinan Acetate Chemical | San Fu vs. Coremax Corp |
| Nan Pao vs. Basso Industry Corp | Nan Pao vs. Chung Hsin Electric Machinery | Nan Pao vs. TYC Brother Industrial | Nan Pao vs. TECO Electric Machinery |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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