Correlation Between Nan Ya and Tigerair Taiwan
Can any of the company-specific risk be diversified away by investing in both Nan Ya and Tigerair Taiwan 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 Tigerair Taiwan 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 Tigerair Taiwan Co, you can compare the effects of market volatilities on Nan Ya and Tigerair Taiwan 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 Tigerair Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Tigerair Taiwan.
Diversification Opportunities for Nan Ya and Tigerair Taiwan
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nan and Tigerair is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Tigerair Taiwan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigerair Taiwan 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 Tigerair Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigerair Taiwan has no effect on the direction of Nan Ya i.e., Nan Ya and Tigerair Taiwan go up and down completely randomly.
Pair Corralation between Nan Ya and Tigerair Taiwan
Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Tigerair Taiwan. But the stock apears to be less risky and, when comparing its historical volatility, Nan Ya Plastics is 1.73 times less risky than Tigerair Taiwan. The stock trades about -0.2 of its potential returns per unit of risk. The Tigerair Taiwan Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,620 in Tigerair Taiwan Co on September 17, 2024 and sell it today you would earn a total of 860.00 from holding Tigerair Taiwan Co or generate 12.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nan Ya Plastics vs. Tigerair Taiwan Co
Performance |
Timeline |
Nan Ya Plastics |
Tigerair Taiwan |
Nan Ya and Tigerair Taiwan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nan Ya and Tigerair Taiwan
The main advantage of trading using opposite Nan Ya and Tigerair Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Ya position performs unexpectedly, Tigerair Taiwan 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 Tigerair Taiwan will offset losses from the drop in Tigerair Taiwan's long position.Nan Ya vs. Formosa Plastics Corp | Nan Ya vs. Formosa Chemicals Fibre | Nan Ya vs. China Steel Corp | Nan Ya vs. Formosa Petrochemical Corp |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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