Correlation Between GlobalWafers and Nanya Technology
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Nanya Technology 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 GlobalWafers and Nanya Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and Nanya Technology Corp, you can compare the effects of market volatilities on GlobalWafers and Nanya Technology 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 GlobalWafers with a short position of Nanya Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Nanya Technology.
Diversification Opportunities for GlobalWafers and Nanya Technology
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlobalWafers and Nanya is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Nanya Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanya Technology Corp and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Nanya Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanya Technology Corp has no effect on the direction of GlobalWafers i.e., GlobalWafers and Nanya Technology go up and down completely randomly.
Pair Corralation between GlobalWafers and Nanya Technology
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Nanya Technology. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 1.85 times less risky than Nanya Technology. The stock trades about -0.4 of its potential returns per unit of risk. The Nanya Technology Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,760 in Nanya Technology Corp on November 5, 2024 and sell it today you would earn a total of 250.00 from holding Nanya Technology Corp or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. Nanya Technology Corp
Performance |
| Timeline |
| GlobalWafers |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nanya Technology Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GlobalWafers and Nanya Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and Nanya Technology
The main advantage of trading using opposite GlobalWafers and Nanya Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Nanya Technology 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 Nanya Technology will offset losses from the drop in Nanya Technology's long position.The idea behind GlobalWafers Co and Nanya Technology Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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