Correlation Between Coremax Corp and Nan Pao

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

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

Diversification Opportunities for Coremax Corp and Nan Pao

0.39

Correlation Coefficient

Coremax Corp  Nan Pao

Weak diversification

The 3 months correlation between Coremax and Nan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Coremax Corp 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 Coremax 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 Coremax Corp 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 Coremax Corp i.e., Coremax Corp and Nan Pao go up and down completely randomly.

Pair Corralation between Coremax Corp and Nan Pao

Assuming the 90 days trading horizon Coremax Corp is expected to under-perform the Nan Pao. In addition to that, Coremax Corp is 1.11 times more volatile than Nan Pao Resins. It trades about -0.06 of its total potential returns per unit of risk. Nan Pao Resins is currently generating about -0.05 per unit of volatility. If you would invest  35,000  in Nan Pao Resins on September 23, 2024 and sell it today you would lose (4,550) from holding Nan Pao Resins or give up 13.0% of portfolio value over 90 days.

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

Coremax Corp  vs.  Nan Pao Resins

Coremax Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nan Pao Resins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nan Pao Resins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nan Pao 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 Coremax Corp and Nan Pao

The main advantage of trading using opposite Coremax Corp and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coremax Corp 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 Coremax Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.