Correlation Between Nan Ya and Lotus Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Lotus Pharmaceutical 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 Ya and Lotus Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nan Ya Printed and Lotus Pharmaceutical Co, you can compare the effects of market volatilities on Nan Ya and Lotus Pharmaceutical 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 Ya with a short position of Lotus Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Lotus Pharmaceutical.
Diversification Opportunities for Nan Ya and Lotus Pharmaceutical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nan and Lotus is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Printed and Lotus Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Pharmaceutical and Nan Ya 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 Ya Printed are associated (or correlated) with Lotus Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Pharmaceutical has no effect on the direction of Nan Ya i.e., Nan Ya and Lotus Pharmaceutical go up and down completely randomly.
Pair Corralation between Nan Ya and Lotus Pharmaceutical
Assuming the 90 days trading horizon Nan Ya Printed is expected to generate 2.88 times more return on investment than Lotus Pharmaceutical. However, Nan Ya is 2.88 times more volatile than Lotus Pharmaceutical Co. It trades about 0.06 of its potential returns per unit of risk. Lotus Pharmaceutical Co is currently generating about -0.16 per unit of risk. If you would invest 13,300 in Nan Ya Printed on November 3, 2024 and sell it today you would earn a total of 300.00 from holding Nan Ya Printed or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Printed vs. Lotus Pharmaceutical Co
Performance |
| Timeline |
| Nan Ya Printed |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Lotus Pharmaceutical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Nan Ya and Lotus Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and Lotus Pharmaceutical
The main advantage of trading using opposite Nan Ya and Lotus Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Lotus Pharmaceutical 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 Lotus Pharmaceutical will offset losses from the drop in Lotus Pharmaceutical's long position.The idea behind Nan Ya Printed and Lotus Pharmaceutical Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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