Correlation Between Nak Sealing and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Nak Sealing and Sunny Friend 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 Nak Sealing and Sunny Friend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nak Sealing Technologies and Sunny Friend Environmental, you can compare the effects of market volatilities on Nak Sealing and Sunny Friend 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 Nak Sealing with a short position of Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nak Sealing and Sunny Friend.
Diversification Opportunities for Nak Sealing and Sunny Friend
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nak and Sunny is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nak Sealing Technologies and Sunny Friend Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Friend Environ and Nak Sealing 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 Nak Sealing Technologies are associated (or correlated) with Sunny Friend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Friend Environ has no effect on the direction of Nak Sealing i.e., Nak Sealing and Sunny Friend go up and down completely randomly.
Pair Corralation between Nak Sealing and Sunny Friend
Assuming the 90 days trading horizon Nak Sealing Technologies is expected to generate 0.54 times more return on investment than Sunny Friend. However, Nak Sealing Technologies is 1.84 times less risky than Sunny Friend. It trades about 0.04 of its potential returns per unit of risk. Sunny Friend Environmental is currently generating about -0.13 per unit of risk. If you would invest 11,450 in Nak Sealing Technologies on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Nak Sealing Technologies or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nak Sealing Technologies vs. Sunny Friend Environmental
Performance |
| Timeline |
| Nak Sealing Technologies |
| Sunny Friend Environ |
Nak Sealing and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nak Sealing and Sunny Friend
The main advantage of trading using opposite Nak Sealing and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nak Sealing position performs unexpectedly, Sunny Friend 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 Sunny Friend will offset losses from the drop in Sunny Friend's long position.| Nak Sealing vs. CHC Resources Corp | Nak Sealing vs. Taiwan Secom Co | Nak Sealing vs. Taiwan Shin Kong | Nak Sealing vs. Yulon Finance Corp |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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