Correlation Between Biwin Storage and Nanya New

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

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

Diversification Opportunities for Biwin Storage and Nanya New

0.87

Correlation Coefficient

Biwin Storage  Nanya New

Very poor diversification

The 3 months correlation between Biwin and Nanya is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Biwin Storage Technology 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 Biwin Storage 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 Biwin Storage Technology 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 Biwin Storage i.e., Biwin Storage and Nanya New go up and down completely randomly.

Pair Corralation between Biwin Storage and Nanya New

Assuming the 90 days trading horizon Biwin Storage is expected to generate 7.92 times less return on investment than Nanya New. But when comparing it to its historical volatility, Biwin Storage Technology is 1.49 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 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,067  in Nanya New Material on December 24, 2024 and sell it today you would earn a total of  1,465  from holding Nanya New Material or generate 70.88% return on investment over 90 days.

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

Biwin Storage Technology  vs.  Nanya New Material

Biwin Storage Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biwin Storage Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biwin Storage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nanya New Material

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nanya New Material are ranked lower than 16 (%) 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 Biwin Storage and Nanya New

The main advantage of trading using opposite Biwin Storage and Nanya New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biwin Storage 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 Biwin Storage Technology 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..