Correlation Between Nan Ya and Sun Race

Can any of the company-specific risk be diversified away by investing in both Nan Ya and Sun Race 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 Sun Race 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 Sun Race Sturmey Archer, you can compare the effects of market volatilities on Nan Ya and Sun Race 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 Sun Race. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Sun Race.

Diversification Opportunities for Nan Ya and Sun Race

0.74

Correlation Coefficient

Nan Ya  Sun Race

Poor diversification

The 3 months correlation between Nan and Sun is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Sun Race Sturmey Archer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Race Sturmey 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 Sun Race. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Race Sturmey has no effect on the direction of Nan Ya i.e., Nan Ya and Sun Race go up and down completely randomly.

Pair Corralation between Nan Ya and Sun Race

Assuming the 90 days trading horizon Nan Ya Plastics is expected to generate 1.78 times more return on investment than Sun Race. However, Nan Ya is 1.78 times more volatile than Sun Race Sturmey Archer. It trades about 0.09 of its potential returns per unit of risk. Sun Race Sturmey Archer is currently generating about 0.14 per unit of risk. If you would invest  3,105  in Nan Ya Plastics on December 20, 2024 and sell it today you would earn a total of  350.00  from holding Nan Ya Plastics or generate 11.27% return on investment over 90 days.

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

Nan Ya Plastics  vs.  Sun Race Sturmey Archer

Nan Ya Plastics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nan Ya Plastics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nan Ya showed solid returns over the last few months and may actually be approaching a breakup point.

Sun Race Sturmey

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Race Sturmey Archer are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sun Race showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nan Ya and Sun Race

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

The idea behind Nan Ya Plastics and Sun Race Sturmey Archer 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.