Correlation Between Nan Pao and Ji Haw
Can any of the company-specific risk be diversified away by investing in both Nan Pao and Ji Haw 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 Ji Haw 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 Ji Haw Industrial Co, you can compare the effects of market volatilities on Nan Pao and Ji Haw 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 Ji Haw. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Pao and Ji Haw.
Diversification Opportunities for Nan Pao and Ji Haw
Very good diversification
The 3 months correlation between Nan and 3011 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nan Pao Resins and Ji Haw Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ji Haw Industrial 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 Ji Haw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ji Haw Industrial has no effect on the direction of Nan Pao i.e., Nan Pao and Ji Haw go up and down completely randomly.
Pair Corralation between Nan Pao and Ji Haw
Assuming the 90 days trading horizon Nan Pao Resins is expected to generate 0.68 times more return on investment than Ji Haw. However, Nan Pao Resins is 1.48 times less risky than Ji Haw. It trades about 0.22 of its potential returns per unit of risk. Ji Haw Industrial Co is currently generating about -0.16 per unit of risk. If you would invest 30,800 in Nan Pao Resins on December 28, 2024 and sell it today you would earn a total of 6,300 from holding Nan Pao Resins or generate 20.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nan Pao Resins vs. Ji Haw Industrial Co
Performance |
Timeline |
Nan Pao Resins |
Ji Haw Industrial |
Nan Pao and Ji Haw Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nan Pao and Ji Haw
The main advantage of trading using opposite Nan Pao and Ji Haw positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nan Pao position performs unexpectedly, Ji Haw 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 Ji Haw will offset losses from the drop in Ji Haw's long position.Nan Pao vs. Feng Hsin Steel | Nan Pao vs. Quintain Steel Co | Nan Pao vs. Sheng Yu Steel | Nan Pao vs. Formosa International Hotels |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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