Correlation Between Nan Pao and Nantex Industry

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

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

Diversification Opportunities for Nan Pao and Nantex Industry

-0.5

Correlation Coefficient

Nan Pao  Nantex Industry

Very good diversification

The 3 months correlation between Nan and Nantex is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nan Pao Resins and Nantex Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantex Industry and Nan Pao 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 Pao Resins are associated (or correlated) with Nantex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantex Industry has no effect on the direction of Nan Pao i.e., Nan Pao and Nantex Industry go up and down completely randomly.

Pair Corralation between Nan Pao and Nantex Industry

Assuming the 90 days trading horizon Nan Pao Resins is expected to under-perform the Nantex Industry. In addition to that, Nan Pao is 1.38 times more volatile than Nantex Industry Co. It trades about -0.29 of its total potential returns per unit of risk. Nantex Industry Co is currently generating about -0.19 per unit of volatility. If you would invest  3,445  in Nantex Industry Co on September 23, 2024 and sell it today you would lose (165.00) from holding Nantex Industry Co or give up 4.79% of portfolio value over 90 days.

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

Nan Pao Resins  vs.  Nantex Industry Co

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.

Nantex Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nantex Industry Co 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.

Pair Trading with Nan Pao and Nantex Industry

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

The idea behind Nan Pao Resins and Nantex Industry 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.