Correlation Between Nan Pao and San Fu
Can any of the company-specific risk be diversified away by investing in both Nan Pao and San Fu 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 San Fu 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 San Fu Chemical, you can compare the effects of market volatilities on Nan Pao and San Fu 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 San Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Pao and San Fu.
Diversification Opportunities for Nan Pao and San Fu
Significant diversification
The 3 months correlation between Nan and San is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nan Pao Resins and San Fu Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fu Chemical 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 San Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fu Chemical has no effect on the direction of Nan Pao i.e., Nan Pao and San Fu go up and down completely randomly.
Pair Corralation between Nan Pao and San Fu
Assuming the 90 days trading horizon Nan Pao Resins is expected to generate 1.0 times more return on investment than San Fu. However, Nan Pao is 1.0 times more volatile than San Fu Chemical. It trades about 0.28 of its potential returns per unit of risk. San Fu Chemical is currently generating about 0.09 per unit of risk. If you would invest 28,350 in Nan Pao Resins on August 30, 2024 and sell it today you would earn a total of 3,950 from holding Nan Pao Resins or generate 13.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Pao Resins vs. San Fu Chemical
Performance |
| Timeline |
| Nan Pao Resins |
| San Fu Chemical |
Nan Pao and San Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Pao and San Fu
The main advantage of trading using opposite Nan Pao and San Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Pao position performs unexpectedly, San Fu 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 San Fu will offset losses from the drop in San Fu's long position.| Nan Pao vs. Taiwan Steel Union | Nan Pao vs. Cleanaway Co | Nan Pao vs. Tung Ho Steel | Nan Pao vs. Chia Yi Steel |
| San Fu vs. Nuvoton Technology Corp | San Fu vs. Shiny Chemical Industrial | San Fu vs. Jinan Acetate Chemical | San Fu vs. Coremax 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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