Correlation Between Nankang Rubber and Hunt Electronic

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

By analyzing existing cross correlation between Nankang Rubber Tire and Hunt Electronic Co, you can compare the effects of market volatilities on Nankang Rubber and Hunt Electronic 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 Nankang Rubber with a short position of Hunt Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nankang Rubber and Hunt Electronic.

Diversification Opportunities for Nankang Rubber and Hunt Electronic

0.26

Correlation Coefficient

Nankang Rubber  Hunt Electronic

Modest diversification

The 3 months correlation between Nankang and Hunt is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nankang Rubber Tire and Hunt Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunt Electronic and Nankang Rubber 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 Nankang Rubber Tire are associated (or correlated) with Hunt Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunt Electronic has no effect on the direction of Nankang Rubber i.e., Nankang Rubber and Hunt Electronic go up and down completely randomly.

Pair Corralation between Nankang Rubber and Hunt Electronic

Assuming the 90 days trading horizon Nankang Rubber is expected to generate 4.36 times less return on investment than Hunt Electronic. But when comparing it to its historical volatility, Nankang Rubber Tire is 1.76 times less risky than Hunt Electronic. It trades about 0.02 of its potential returns per unit of risk. Hunt Electronic Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,730  in Hunt Electronic Co on October 7, 2024 and sell it today you would earn a total of  450.00  from holding Hunt Electronic Co or generate 26.01% return on investment over 90 days.

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

Nankang Rubber Tire  vs.  Hunt Electronic Co

Nankang Rubber Tire

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nankang Rubber Tire has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Hunt Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hunt Electronic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nankang Rubber and Hunt Electronic

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

The idea behind Nankang Rubber Tire and Hunt Electronic 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.