Correlation Between Taiwan Weighted and Nan Pao
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Nan Pao 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 Taiwan Weighted and Nan Pao into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Nan Pao Resins, you can compare the effects of market volatilities on Taiwan Weighted and Nan Pao 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 Taiwan Weighted with a short position of Nan Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Nan Pao.
Diversification Opportunities for Taiwan Weighted and Nan Pao
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Nan is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Nan Pao Resins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Pao Resins and Taiwan Weighted 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 Taiwan Weighted are associated (or correlated) with Nan Pao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Pao Resins has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Nan Pao go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Nan Pao
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 2.18 times less return on investment than Nan Pao. But when comparing it to its historical volatility, Taiwan Weighted is 2.06 times less risky than Nan Pao. It trades about 0.09 of its potential returns per unit of risk. Nan Pao Resins is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13,600 in Nan Pao Resins on August 30, 2024 and sell it today you would earn a total of 18,700 from holding Nan Pao Resins or generate 137.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Taiwan Weighted vs. Nan Pao Resins
Performance |
| Timeline |
Taiwan Weighted and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Nan Pao Resins
Pair trading matchups for Nan Pao
Pair Trading with Taiwan Weighted and Nan Pao
The main advantage of trading using opposite Taiwan Weighted and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Nan Pao 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 Pao will offset losses from the drop in Nan Pao's long position.| Taiwan Weighted vs. V Tac Technology Co | Taiwan Weighted vs. Sesoda Corp | Taiwan Weighted vs. Asmedia Technology | Taiwan Weighted vs. Oceanic Beverages Co |
| Nan Pao vs. Sinopac Financial Holdings | Nan Pao vs. Integrated Service Technology | Nan Pao vs. Microtips Technology | Nan Pao 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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