Correlation Between Nan Ya and Pan International

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

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

Diversification Opportunities for Nan Ya and Pan International

0.17

Correlation Coefficient

Nan Ya  Pan International

Average diversification

The 3 months correlation between Nan and Pan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Printed and Pan International Industrial C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan International and Nan Ya 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 Ya Printed are associated (or correlated) with Pan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan International has no effect on the direction of Nan Ya i.e., Nan Ya and Pan International go up and down completely randomly.

Pair Corralation between Nan Ya and Pan International

Assuming the 90 days trading horizon Nan Ya is expected to generate 6.53 times less return on investment than Pan International. In addition to that, Nan Ya is 1.05 times more volatile than Pan International Industrial Corp. It trades about 0.02 of its total potential returns per unit of risk. Pan International Industrial Corp is currently generating about 0.12 per unit of volatility. If you would invest  4,250  in Pan International Industrial Corp on December 27, 2024 and sell it today you would earn a total of  770.00  from holding Pan International Industrial Corp or generate 18.12% return on investment over 90 days.

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

Nan Ya Printed  vs.  Pan International Industrial C

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.

Pan International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pan International Industrial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pan International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nan Ya and Pan International

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

The idea behind Nan Ya Printed and Pan International Industrial Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.