Correlation Between Nan Ya and FocalTech Systems

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

Diversification Opportunities for Nan Ya and FocalTech Systems

0.12

Correlation Coefficient

Nan Ya  FocalTech Systems

Average diversification

The 3 months correlation between Nan and FocalTech is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and FocalTech Systems Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FocalTech Systems 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 FocalTech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FocalTech Systems has no effect on the direction of Nan Ya i.e., Nan Ya and FocalTech Systems go up and down completely randomly.

Pair Corralation between Nan Ya and FocalTech Systems

Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the FocalTech Systems. But the stock apears to be less risky and, when comparing its historical volatility, Nan Ya Plastics is 1.07 times less risky than FocalTech Systems. The stock trades about -0.12 of its potential returns per unit of risk. The FocalTech Systems Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  8,290  in FocalTech Systems Co on September 5, 2024 and sell it today you would earn a total of  600.00  from holding FocalTech Systems Co or generate 7.24% return on investment over 90 days.

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

Nan Ya Plastics  vs.  FocalTech Systems Co

Nan Ya Plastics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nan Ya Plastics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

FocalTech Systems

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FocalTech Systems Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FocalTech Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nan Ya and FocalTech Systems

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

The idea behind Nan Ya Plastics and FocalTech Systems 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 Stocks Directory module to find actively traded stocks across global markets.