Correlation Between Nan Ya and New Era
Can any of the company-specific risk be diversified away by investing in both Nan Ya and New Era 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 New Era 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 New Era Electronics, you can compare the effects of market volatilities on Nan Ya and New Era 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 New Era. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and New Era.
Diversification Opportunities for Nan Ya and New Era
Poor diversification
The 3 months correlation between Nan and New is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Printed and New Era Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Electronics 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 New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Electronics has no effect on the direction of Nan Ya i.e., Nan Ya and New Era go up and down completely randomly.
Pair Corralation between Nan Ya and New Era
Assuming the 90 days trading horizon Nan Ya Printed is expected to under-perform the New Era. But the stock apears to be less risky and, when comparing its historical volatility, Nan Ya Printed is 2.03 times less risky than New Era. The stock trades about -0.12 of its potential returns per unit of risk. The New Era Electronics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,345 in New Era Electronics on September 4, 2024 and sell it today you would earn a total of 9,855 from holding New Era Electronics or generate 420.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nan Ya Printed vs. New Era Electronics
Performance |
| Timeline |
| Nan Ya Printed |
| New Era Electronics |
Nan Ya and New Era Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nan Ya and New Era
The main advantage of trading using opposite Nan Ya and New Era positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, New Era 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 New Era will offset losses from the drop in New Era's long position.| Nan Ya vs. Taiwan Semiconductor Manufacturing | Nan Ya vs. Yang Ming Marine | Nan Ya vs. ASE Industrial Holding | Nan Ya vs. AU Optronics |
| New Era vs. Unimicron Technology Corp | New Era vs. Nan Ya Printed | New Era vs. Elite Material Co | New Era vs. Compeq Manufacturing Co |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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