Correlation Between Taiwan Union and Nan Ya

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

By analyzing existing cross correlation between Taiwan Union Technology and Nan Ya Printed, you can compare the effects of market volatilities on Taiwan Union and Nan Ya 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 Taiwan Union with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Union and Nan Ya.

Diversification Opportunities for Taiwan Union and Nan Ya

-0.57

Correlation Coefficient

Taiwan Union  Nan Ya

Excellent diversification

The 3 months correlation between Taiwan and Nan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Union Technology and Nan Ya Printed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Printed and Taiwan Union 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 Taiwan Union Technology are associated (or correlated) with Nan Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Ya Printed has no effect on the direction of Taiwan Union i.e., Taiwan Union and Nan Ya go up and down completely randomly.

Pair Corralation between Taiwan Union and Nan Ya

Assuming the 90 days trading horizon Taiwan Union is expected to generate 1.01 times less return on investment than Nan Ya. But when comparing it to its historical volatility, Taiwan Union Technology is 1.34 times less risky than Nan Ya. It trades about 0.02 of its potential returns per unit of risk. Nan Ya Printed is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12,450  in Nan Ya Printed on December 27, 2024 and sell it today you would earn a total of  50.00  from holding Nan Ya Printed or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Taiwan Union Technology  vs.  Nan Ya Printed

Taiwan Union Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Union Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taiwan Union is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Nan Ya Printed

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nan Ya Printed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Nan Ya 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 Taiwan Union and Nan Ya

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

The idea behind Taiwan Union Technology and Nan Ya Printed 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.