Correlation Between Nak Sealing and Thye Ming

Can any of the company-specific risk be diversified away by investing in both Nak Sealing and Thye Ming 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 Nak Sealing and Thye Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nak Sealing Technologies and Thye Ming Industrial, you can compare the effects of market volatilities on Nak Sealing and Thye Ming 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 Nak Sealing with a short position of Thye Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nak Sealing and Thye Ming.

Diversification Opportunities for Nak Sealing and Thye Ming

0.74

Correlation Coefficient

Nak Sealing  Thye Ming

Poor diversification

The 3 months correlation between Nak and Thye is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nak Sealing Technologies and Thye Ming Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thye Ming Industrial and Nak Sealing 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 Nak Sealing Technologies are associated (or correlated) with Thye Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thye Ming Industrial has no effect on the direction of Nak Sealing i.e., Nak Sealing and Thye Ming go up and down completely randomly.

Pair Corralation between Nak Sealing and Thye Ming

Assuming the 90 days trading horizon Nak Sealing is expected to generate 2.76 times less return on investment than Thye Ming. In addition to that, Nak Sealing is 1.18 times more volatile than Thye Ming Industrial. It trades about 0.13 of its total potential returns per unit of risk. Thye Ming Industrial is currently generating about 0.42 per unit of volatility. If you would invest  6,250  in Thye Ming Industrial on December 20, 2024 and sell it today you would earn a total of  1,250  from holding Thye Ming Industrial or generate 20.0% return on investment over 90 days.

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

Nak Sealing Technologies  vs.  Thye Ming Industrial

Nak Sealing Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nak Sealing Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nak Sealing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Thye Ming Industrial

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Thye Ming Industrial are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Thye Ming showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nak Sealing and Thye Ming

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

The idea behind Nak Sealing Technologies and Thye Ming Industrial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.