Correlation Between DingZing Advanced and Nan Ya
Can any of the company-specific risk be diversified away by investing in both DingZing Advanced 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 DingZing Advanced and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DingZing Advanced Materials and Nan Ya Plastics, you can compare the effects of market volatilities on DingZing Advanced 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 DingZing Advanced with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of DingZing Advanced and Nan Ya.
Diversification Opportunities for DingZing Advanced and Nan Ya
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DingZing and Nan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding DingZing Advanced Materials 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 DingZing Advanced 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 DingZing Advanced Materials 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 DingZing Advanced i.e., DingZing Advanced and Nan Ya go up and down completely randomly.
Pair Corralation between DingZing Advanced and Nan Ya
Assuming the 90 days trading horizon DingZing Advanced Materials is expected to generate 0.76 times more return on investment than Nan Ya. However, DingZing Advanced Materials is 1.31 times less risky than Nan Ya. It trades about 0.23 of its potential returns per unit of risk. Nan Ya Plastics is currently generating about 0.09 per unit of risk. If you would invest 14,150 in DingZing Advanced Materials on October 28, 2024 and sell it today you would earn a total of 1,350 from holding DingZing Advanced Materials or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DingZing Advanced Materials vs. Nan Ya Plastics
Performance |
| Timeline |
| DingZing Advanced |
| Nan Ya Plastics |
DingZing Advanced and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DingZing Advanced and Nan Ya
The main advantage of trading using opposite DingZing Advanced and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DingZing Advanced 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.| DingZing Advanced vs. Nan Ya Plastics | DingZing Advanced vs. China Petrochemical Development | DingZing Advanced vs. Eternal Materials Co | DingZing Advanced vs. TSRC Corp |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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