Correlation Between YuantaP Shares and Fubon Taiwan
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Fubon Taiwan 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 YuantaP Shares and Fubon Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YuantaP shares Taiwan Top and Fubon Taiwan Technology, you can compare the effects of market volatilities on YuantaP Shares and Fubon Taiwan 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 YuantaP Shares with a short position of Fubon Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Fubon Taiwan.
Diversification Opportunities for YuantaP Shares and Fubon Taiwan
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between YuantaP and Fubon is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Fubon Taiwan Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Taiwan Technology and YuantaP Shares 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 YuantaP shares Taiwan Top are associated (or correlated) with Fubon Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Taiwan Technology has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Fubon Taiwan go up and down completely randomly.
Pair Corralation between YuantaP Shares and Fubon Taiwan
Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 0.93 times more return on investment than Fubon Taiwan. However, YuantaP shares Taiwan Top is 1.07 times less risky than Fubon Taiwan. It trades about 0.06 of its potential returns per unit of risk. Fubon Taiwan Technology is currently generating about 0.06 per unit of risk. If you would invest 16,600 in YuantaP shares Taiwan Top on September 2, 2024 and sell it today you would earn a total of 2,125 from holding YuantaP shares Taiwan Top or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 96.06% |
| Values | Daily Returns |
YuantaP shares Taiwan Top vs. Fubon Taiwan Technology
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Fubon Taiwan Technology |
YuantaP Shares and Fubon Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Fubon Taiwan
The main advantage of trading using opposite YuantaP Shares and Fubon Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Fubon Taiwan 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 Fubon Taiwan will offset losses from the drop in Fubon Taiwan's long position.| YuantaP Shares vs. YuantaP shares MSCI Taiwan | YuantaP Shares vs. YuantaP shares Taiwan GreTai | YuantaP Shares vs. YuantaP shares SSE50 | YuantaP Shares vs. YuantaP shares Taiwan Mid Cap |
| Fubon Taiwan vs. Taiwan Taomee Co | Fubon Taiwan vs. AP Memory Technology | Fubon Taiwan vs. RichWave Technology Corp | Fubon Taiwan vs. Fitipower Integrated Technology |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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