Correlation Between Nan Pao and Unic Technology

Can any of the company-specific risk be diversified away by investing in both Nan Pao and Unic Technology 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 Unic Technology 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 Unic Technology, you can compare the effects of market volatilities on Nan Pao and Unic Technology 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 Unic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Pao and Unic Technology.

Diversification Opportunities for Nan Pao and Unic Technology

-0.45

Correlation Coefficient

Nan Pao  Unic Technology

Very good diversification

The 3 months correlation between Nan and Unic is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nan Pao Resins and Unic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unic Technology 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 Unic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unic Technology has no effect on the direction of Nan Pao i.e., Nan Pao and Unic Technology go up and down completely randomly.

Pair Corralation between Nan Pao and Unic Technology

Assuming the 90 days trading horizon Nan Pao is expected to generate 1.04 times less return on investment than Unic Technology. But when comparing it to its historical volatility, Nan Pao Resins is 1.48 times less risky than Unic Technology. It trades about 0.09 of its potential returns per unit of risk. Unic Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,399  in Unic Technology on October 11, 2024 and sell it today you would earn a total of  1,651  from holding Unic Technology or generate 118.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Nan Pao Resins  vs.  Unic Technology

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 February 2025.

Unic Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unic Technology 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 Unic Technology

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

The idea behind Nan Pao Resins and Unic Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.