Correlation Between Nan Ya and AV Tech

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

Diversification Opportunities for Nan Ya and AV Tech

0.56

Correlation Coefficient

Nan Ya  AV Tech

Very weak diversification

The 3 months correlation between Nan and 8072 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Plastics and AV Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AV Tech Corp 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 AV Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AV Tech Corp has no effect on the direction of Nan Ya i.e., Nan Ya and AV Tech go up and down completely randomly.

Pair Corralation between Nan Ya and AV Tech

Assuming the 90 days trading horizon Nan Ya is expected to generate 4.63 times less return on investment than AV Tech. In addition to that, Nan Ya is 1.24 times more volatile than AV Tech Corp. It trades about 0.03 of its total potential returns per unit of risk. AV Tech Corp is currently generating about 0.19 per unit of volatility. If you would invest  2,455  in AV Tech Corp on December 28, 2024 and sell it today you would earn a total of  575.00  from holding AV Tech Corp or generate 23.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.21%
Values	Daily Returns

Nan Ya Plastics  vs.  AV Tech Corp

Nan Ya Plastics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nan Ya Plastics are ranked lower than 2 (%) 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.

AV Tech Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AV Tech Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AV Tech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nan Ya and AV Tech

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

The idea behind Nan Ya Plastics and AV Tech 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.