Correlation Between Double Bond and Nan Pao
Can any of the company-specific risk be diversified away by investing in both Double Bond 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 Double Bond and Nan Pao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Double Bond Chemical and Nan Pao Resins, you can compare the effects of market volatilities on Double Bond 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 Double Bond with a short position of Nan Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Double Bond and Nan Pao.
Diversification Opportunities for Double Bond and Nan Pao
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Double and Nan is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Double Bond 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 Double Bond 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 Double Bond 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 Double Bond i.e., Double Bond and Nan Pao go up and down completely randomly.
Pair Corralation between Double Bond and Nan Pao
Assuming the 90 days trading horizon Double Bond Chemical is expected to generate 0.66 times more return on investment than Nan Pao. However, Double Bond Chemical is 1.51 times less risky than Nan Pao. It trades about 0.05 of its potential returns per unit of risk. Nan Pao Resins is currently generating about -0.03 per unit of risk. If you would invest 4,150 in Double Bond Chemical on September 13, 2024 and sell it today you would earn a total of 335.00 from holding Double Bond Chemical or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Double Bond Chemical vs. Nan Pao Resins
Performance |
| Timeline |
| Double Bond Chemical |
| Nan Pao Resins |
Double Bond and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Double Bond and Nan Pao
The main advantage of trading using opposite Double Bond and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Double Bond 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.| Double Bond vs. Delta Electronics | Double Bond vs. Ruentex Development Co | Double Bond vs. WiseChip Semiconductor | Double Bond vs. Novatek Microelectronics Corp |
| Nan Pao vs. Phoenix Silicon International | Nan Pao vs. Namchow Chemical Industrial | Nan Pao vs. Grand Pacific Petrochemical | Nan Pao vs. Mechema Chemicals Int |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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