Correlation Between Jiangsu Yueda and Nanya New

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

By analyzing existing cross correlation between Jiangsu Yueda Investment and Nanya New Material, you can compare the effects of market volatilities on Jiangsu Yueda and Nanya New 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 Jiangsu Yueda with a short position of Nanya New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Yueda and Nanya New.

Diversification Opportunities for Jiangsu Yueda and Nanya New

-0.05

Correlation Coefficient

Jiangsu Yueda  Nanya New

Good diversification

The 3 months correlation between Jiangsu and Nanya is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Yueda Investment and Nanya New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanya New Material and Jiangsu Yueda 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 Jiangsu Yueda Investment are associated (or correlated) with Nanya New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanya New Material has no effect on the direction of Jiangsu Yueda i.e., Jiangsu Yueda and Nanya New go up and down completely randomly.

Pair Corralation between Jiangsu Yueda and Nanya New

Assuming the 90 days trading horizon Jiangsu Yueda Investment is expected to under-perform the Nanya New. But the stock apears to be less risky and, when comparing its historical volatility, Jiangsu Yueda Investment is 1.31 times less risky than Nanya New. The stock trades about -0.28 of its potential returns per unit of risk. The Nanya New Material is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  2,161  in Nanya New Material on October 9, 2024 and sell it today you would lose (244.00) from holding Nanya New Material or give up 11.29% of portfolio value over 90 days.

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

Jiangsu Yueda Investment  vs.  Nanya New Material

Jiangsu Yueda Investment

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Yueda Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangsu Yueda is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nanya New Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanya New Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Jiangsu Yueda and Nanya New

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

The idea behind Jiangsu Yueda Investment and Nanya New Material 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.