Correlation Between Nan Pao and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Nan Pao 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 Nan Pao and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nan Pao Resins and Nan Ya Plastics, you can compare the effects of market volatilities on Nan Pao 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 Nan Pao with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Pao and Nan Ya.
Diversification Opportunities for Nan Pao and Nan Ya
Very good diversification
The 3 months correlation between Nan and Nan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nan Pao Resins 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 Nan Pao 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 Nan Pao Resins 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 Nan Pao i.e., Nan Pao and Nan Ya go up and down completely randomly.
Pair Corralation between Nan Pao and Nan Ya
Assuming the 90 days trading horizon Nan Pao is expected to generate 1.17 times less return on investment than Nan Ya. But when comparing it to its historical volatility, Nan Pao Resins is 2.13 times less risky than Nan Ya. It trades about 0.17 of its potential returns per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Pao Resins vs. Nan Ya Plastics
Performance |
| Timeline |
| Nan Pao Resins |
| Nan Ya Plastics |
Nan Pao and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Pao and Nan Ya
The main advantage of trading using opposite Nan Pao and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Pao 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.| Nan Pao vs. Niko Semiconductor Co | Nan Pao vs. WIN Semiconductors | Nan Pao vs. Davicom Semiconductor | Nan Pao vs. Orient Semiconductor Electronics |
| Nan Ya vs. Formosa Plastics Corp | Nan Ya vs. Formosa Chemicals Fibre | Nan Ya vs. China Steel Corp | Nan Ya vs. Formosa Petrochemical 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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