Correlation Between Nan Ya and Chaun Choung

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

Diversification Opportunities for Nan Ya and Chaun Choung

0.48

Correlation Coefficient

Nan Ya  Chaun Choung

Very weak diversification

The 3 months correlation between Nan and Chaun is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and Chaun Choung Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaun Choung Technology 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 Chaun Choung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaun Choung Technology has no effect on the direction of Nan Ya i.e., Nan Ya and Chaun Choung go up and down completely randomly.

Pair Corralation between Nan Ya and Chaun Choung

Assuming the 90 days trading horizon Nan Ya Plastics is expected to under-perform the Chaun Choung. But the stock apears to be less risky and, when comparing its historical volatility, Nan Ya Plastics is 1.65 times less risky than Chaun Choung. The stock trades about -0.1 of its potential returns per unit of risk. The Chaun Choung Technology Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  21,100  in Chaun Choung Technology Corp on September 5, 2024 and sell it today you would earn a total of  50.00  from holding Chaun Choung Technology Corp or generate 0.24% return on investment over 90 days.

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

Nan Ya Plastics  vs.  Chaun Choung Technology Corp

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.

Chaun Choung Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chaun Choung Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chaun Choung is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nan Ya and Chaun Choung

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

The idea behind Nan Ya Plastics and Chaun Choung Technology Corp 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.