Correlation Between YuantaP Shares and Cathay DJIA
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Cathay DJIA 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 Cathay DJIA 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 Cathay DJIA Inv, you can compare the effects of market volatilities on YuantaP Shares and Cathay DJIA 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 Cathay DJIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Cathay DJIA.
Diversification Opportunities for YuantaP Shares and Cathay DJIA
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between YuantaP and Cathay is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Cathay DJIA Inv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay DJIA Inv 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 Cathay DJIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay DJIA Inv has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Cathay DJIA go up and down completely randomly.
Pair Corralation between YuantaP Shares and Cathay DJIA
Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 2.22 times more return on investment than Cathay DJIA. However, YuantaP Shares is 2.22 times more volatile than Cathay DJIA Inv. It trades about 0.12 of its potential returns per unit of risk. Cathay DJIA Inv is currently generating about -0.09 per unit of risk. If you would invest 12,814 in YuantaP shares Taiwan Top on August 27, 2024 and sell it today you would earn a total of 6,491 from holding YuantaP shares Taiwan Top or generate 50.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.93% |
| Values | Daily Returns |
YuantaP shares Taiwan Top vs. Cathay DJIA Inv
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Cathay DJIA Inv |
YuantaP Shares and Cathay DJIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Cathay DJIA
The main advantage of trading using opposite YuantaP Shares and Cathay DJIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Cathay DJIA 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 Cathay DJIA will offset losses from the drop in Cathay DJIA'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 |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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