Correlation Between Sportsoul and Nanya New

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

By analyzing existing cross correlation between Sportsoul Co Ltd and Nanya New Material, you can compare the effects of market volatilities on Sportsoul and Nanya New 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 Sportsoul with a short position of Nanya New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportsoul and Nanya New.

Diversification Opportunities for Sportsoul and Nanya New

0.84

Correlation Coefficient

Sportsoul  Nanya New

Very poor diversification

The 3 months correlation between Sportsoul and Nanya is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sportsoul Co Ltd and Nanya New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanya New Material and Sportsoul 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 Sportsoul Co Ltd are associated (or correlated) with Nanya New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanya New Material has no effect on the direction of Sportsoul i.e., Sportsoul and Nanya New go up and down completely randomly.

Pair Corralation between Sportsoul and Nanya New

Assuming the 90 days trading horizon Sportsoul is expected to generate 8.74 times less return on investment than Nanya New. But when comparing it to its historical volatility, Sportsoul Co Ltd is 2.38 times less risky than Nanya New. It trades about 0.05 of its potential returns per unit of risk. Nanya New Material is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,125  in Nanya New Material on December 26, 2024 and sell it today you would earn a total of  1,256  from holding Nanya New Material or generate 59.11% return on investment over 90 days.

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

Sportsoul Co Ltd  vs.  Nanya New Material

Sportsoul

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sportsoul Co Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sportsoul may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nanya New Material

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nanya New Material are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanya New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sportsoul and Nanya New

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

The idea behind Sportsoul Co Ltd and Nanya New Material 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.