Correlation Between Nan Ya and Gemtek Technology

Can any of the company-specific risk be diversified away by investing in both Nan Ya and Gemtek Technology 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 Gemtek Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nan Ya Plastics and Gemtek Technology Co, you can compare the effects of market volatilities on Nan Ya and Gemtek Technology 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 Gemtek Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Gemtek Technology.

Diversification Opportunities for Nan Ya and Gemtek Technology

0.36

Correlation Coefficient

Nan Ya  Gemtek Technology

Weak diversification

The 3 months correlation between Nan and Gemtek is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Gemtek Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemtek Technology 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 Plastics are associated (or correlated) with Gemtek Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemtek Technology has no effect on the direction of Nan Ya i.e., Nan Ya and Gemtek Technology go up and down completely randomly.

Pair Corralation between Nan Ya and Gemtek Technology

Assuming the 90 days trading horizon Nan Ya Plastics is expected to generate 0.97 times more return on investment than Gemtek Technology. However, Nan Ya Plastics is 1.03 times less risky than Gemtek Technology. It trades about -0.01 of its potential returns per unit of risk. Gemtek Technology Co is currently generating about -0.05 per unit of risk. If you would invest  3,935  in Nan Ya Plastics on September 5, 2024 and sell it today you would lose (65.00) from holding Nan Ya Plastics or give up 1.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nan Ya Plastics  vs.  Gemtek Technology Co

Nan Ya Plastics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Nan Ya Plastics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nan Ya is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Gemtek Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemtek Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gemtek Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nan Ya and Gemtek Technology

The main advantage of trading using opposite Nan Ya and Gemtek Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Gemtek Technology 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 Gemtek Technology will offset losses from the drop in Gemtek Technology's long position.

The idea behind Nan Ya Plastics and Gemtek Technology 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.