Correlation Between Nan Ya and Global Unichip

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

Diversification Opportunities for Nan Ya and Global Unichip

0.32

Correlation Coefficient

Nan Ya  Global Unichip

Weak diversification

The 3 months correlation between Nan and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nan Ya Printed and Global Unichip Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Unichip Corp 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 Global Unichip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Unichip Corp has no effect on the direction of Nan Ya i.e., Nan Ya and Global Unichip go up and down completely randomly.

Pair Corralation between Nan Ya and Global Unichip

Assuming the 90 days trading horizon Nan Ya Printed is expected to generate 0.97 times more return on investment than Global Unichip. However, Nan Ya Printed is 1.03 times less risky than Global Unichip. It trades about 0.08 of its potential returns per unit of risk. Global Unichip Corp is currently generating about 0.06 per unit of risk. If you would invest  11,700  in Nan Ya Printed on December 4, 2024 and sell it today you would earn a total of  1,300  from holding Nan Ya Printed or generate 11.11% return on investment over 90 days.

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

Nan Ya Printed  vs.  Global Unichip Corp

Nan Ya Printed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nan Ya Printed are ranked lower than 5 (%) 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.

Global Unichip Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Unichip Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Global Unichip showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nan Ya and Global Unichip

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

The idea behind Nan Ya Printed and Global Unichip 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.