Correlation Between Microelectronics and Nan Pao

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

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

Diversification Opportunities for Microelectronics and Nan Pao

0.1

Correlation Coefficient

Microelectronics  Nan Pao

Average diversification

The 3 months correlation between Microelectronics and Nan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology and Nan Pao Resins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Pao Resins and Microelectronics 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 Microelectronics Technology are associated (or correlated) with Nan Pao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Pao Resins has no effect on the direction of Microelectronics i.e., Microelectronics and Nan Pao go up and down completely randomly.

Pair Corralation between Microelectronics and Nan Pao

Assuming the 90 days trading horizon Microelectronics Technology is expected to generate 1.47 times more return on investment than Nan Pao. However, Microelectronics is 1.47 times more volatile than Nan Pao Resins. It trades about 0.07 of its potential returns per unit of risk. Nan Pao Resins is currently generating about 0.06 per unit of risk. If you would invest  2,970  in Microelectronics Technology on September 18, 2024 and sell it today you would earn a total of  310.00  from holding Microelectronics Technology or generate 10.44% return on investment over 90 days.

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

Microelectronics Technology  vs.  Nan Pao Resins

Microelectronics Tec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Microelectronics Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Microelectronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nan Pao Resins

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nan Pao Resins are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nan Pao may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microelectronics and Nan Pao

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

The idea behind Microelectronics Technology and Nan Pao Resins 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.