Correlation Between TSRC Corp and Nan Ya

Can any of the company-specific risk be diversified away by investing in both TSRC Corp and Nan Ya 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 TSRC Corp and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TSRC Corp and Nan Ya Plastics, you can compare the effects of market volatilities on TSRC Corp and Nan Ya 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 TSRC Corp with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of TSRC Corp and Nan Ya.

Diversification Opportunities for TSRC Corp and Nan Ya

0.83

Correlation Coefficient

TSRC Corp  Nan Ya

Very poor diversification

The 3 months correlation between TSRC and Nan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TSRC Corp and Nan Ya Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Plastics and TSRC Corp 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 TSRC Corp are associated (or correlated) with Nan Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Ya Plastics has no effect on the direction of TSRC Corp i.e., TSRC Corp and Nan Ya go up and down completely randomly.

Pair Corralation between TSRC Corp and Nan Ya

Assuming the 90 days trading horizon TSRC Corp is expected to generate 0.61 times more return on investment than Nan Ya. However, TSRC Corp is 1.63 times less risky than Nan Ya. It trades about -0.66 of its potential returns per unit of risk. Nan Ya Plastics is currently generating about -0.68 per unit of risk. If you would invest  2,350  in TSRC Corp on September 23, 2024 and sell it today you would lose (330.00) from holding TSRC Corp or give up 14.04% of portfolio value over 90 days.

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

TSRC Corp  vs.  Nan Ya Plastics

TSRC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TSRC Corp 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.

Nan Ya Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nan Ya Plastics 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with TSRC Corp and Nan Ya

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

The idea behind TSRC Corp and Nan Ya Plastics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.