Correlation Between GRIPM Advanced and Nanya New

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

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

Diversification Opportunities for GRIPM Advanced and Nanya New

0.82

Correlation Coefficient

GRIPM Advanced  Nanya New

Very poor diversification

The 3 months correlation between GRIPM and Nanya is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding GRIPM Advanced Materials 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 GRIPM Advanced 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 GRIPM Advanced Materials 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 GRIPM Advanced i.e., GRIPM Advanced and Nanya New go up and down completely randomly.

Pair Corralation between GRIPM Advanced and Nanya New

Assuming the 90 days trading horizon GRIPM Advanced is expected to generate 12.63 times less return on investment than Nanya New. But when comparing it to its historical volatility, GRIPM Advanced Materials is 2.68 times less risky than Nanya New. It trades about 0.04 of its potential returns per unit of risk. Nanya New Material is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,226  in Nanya New Material on December 30, 2024 and sell it today you would earn a total of  1,284  from holding Nanya New Material or generate 57.68% return on investment over 90 days.

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

GRIPM Advanced Materials  vs.  Nanya New Material

GRIPM Advanced Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRIPM Advanced Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GRIPM Advanced 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nanya New Material are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanya New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRIPM Advanced and Nanya New

The main advantage of trading using opposite GRIPM Advanced and Nanya New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRIPM Advanced 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 GRIPM Advanced Materials 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.