Correlation Between Nan Ya and Holy Stone

Can any of the company-specific risk be diversified away by investing in both Nan Ya and Holy Stone 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 Holy Stone 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 Holy Stone Enterprise, you can compare the effects of market volatilities on Nan Ya and Holy Stone 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 Holy Stone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Ya and Holy Stone.

Diversification Opportunities for Nan Ya and Holy Stone

0.18

Correlation Coefficient

Nan Ya  Holy Stone

Average diversification

The 3 months correlation between Nan and Holy is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Printed and Holy Stone Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holy Stone Enterprise 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 Holy Stone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holy Stone Enterprise has no effect on the direction of Nan Ya i.e., Nan Ya and Holy Stone go up and down completely randomly.

Pair Corralation between Nan Ya and Holy Stone

Assuming the 90 days trading horizon Nan Ya Printed is expected to generate 3.43 times more return on investment than Holy Stone. However, Nan Ya is 3.43 times more volatile than Holy Stone Enterprise. It trades about 0.1 of its potential returns per unit of risk. Holy Stone Enterprise is currently generating about 0.19 per unit of risk. If you would invest  11,100  in Nan Ya Printed on December 20, 2024 and sell it today you would earn a total of  1,750  from holding Nan Ya Printed or generate 15.77% 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.  Holy Stone Enterprise

Nan Ya Printed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nan Ya Printed are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nan Ya showed solid returns over the last few months and may actually be approaching a breakup point.

Holy Stone Enterprise

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holy Stone Enterprise are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Holy Stone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nan Ya and Holy Stone

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

The idea behind Nan Ya Printed and Holy Stone Enterprise 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.