Correlation Between Nanya Technology and Youngtek Electronics

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

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

Diversification Opportunities for Nanya Technology and Youngtek Electronics

0.06

Correlation Coefficient

Nanya Technology  Youngtek Electronics

Significant diversification

The 3 months correlation between Nanya and Youngtek is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nanya Technology Corp and Youngtek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngtek Electronics and Nanya Technology 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 Nanya Technology Corp are associated (or correlated) with Youngtek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngtek Electronics has no effect on the direction of Nanya Technology i.e., Nanya Technology and Youngtek Electronics go up and down completely randomly.

Pair Corralation between Nanya Technology and Youngtek Electronics

Assuming the 90 days trading horizon Nanya Technology Corp is expected to generate 1.68 times more return on investment than Youngtek Electronics. However, Nanya Technology is 1.68 times more volatile than Youngtek Electronics. It trades about -0.06 of its potential returns per unit of risk. Youngtek Electronics is currently generating about -0.27 per unit of risk. If you would invest  6,580  in Nanya Technology Corp on March 4, 2024 and sell it today you would lose (130.00) from holding Nanya Technology Corp or give up 1.98% of portfolio value over 90 days.

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

Nanya Technology Corp  vs.  Youngtek Electronics

Nanya Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanya Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nanya Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Youngtek Electronics

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Youngtek Electronics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Youngtek Electronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nanya Technology and Youngtek Electronics

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

The idea behind Nanya Technology Corp and Youngtek Electronics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.