Correlation Between Nankang Rubber and Sanyang
Can any of the company-specific risk be diversified away by investing in both Nankang Rubber and Sanyang 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 Nankang Rubber and Sanyang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nankang Rubber Tire and Sanyang Motor Co, you can compare the effects of market volatilities on Nankang Rubber and Sanyang 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 Nankang Rubber with a short position of Sanyang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and Sanyang.
Diversification Opportunities for Nankang Rubber and Sanyang
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nankang and Sanyang is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and Sanyang Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyang Motor and Nankang Rubber 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 Nankang Rubber Tire are associated (or correlated) with Sanyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyang Motor has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and Sanyang go up and down completely randomly.
Pair Corralation between Nankang Rubber and Sanyang
Assuming the 90 days trading horizon Nankang Rubber Tire is expected to generate 1.58 times more return on investment than Sanyang. However, Nankang Rubber is 1.58 times more volatile than Sanyang Motor Co. It trades about -0.03 of its potential returns per unit of risk. Sanyang Motor Co is currently generating about -0.14 per unit of risk. If you would invest 4,825 in Nankang Rubber Tire on September 23, 2024 and sell it today you would lose (215.00) from holding Nankang Rubber Tire or give up 4.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nankang Rubber Tire vs. Sanyang Motor Co
Performance |
Timeline |
Nankang Rubber Tire |
Sanyang Motor |
Nankang Rubber and Sanyang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nankang Rubber and Sanyang
The main advantage of trading using opposite Nankang Rubber and Sanyang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nankang Rubber position performs unexpectedly, Sanyang 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 Sanyang will offset losses from the drop in Sanyang's long position.Nankang Rubber vs. Merida Industry Co | Nankang Rubber vs. Cheng Shin Rubber | Nankang Rubber vs. Uni President Enterprises Corp | Nankang Rubber vs. Pou Chen 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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