Correlation Between YuantaP Shares and Lan Fa
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Lan Fa 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 Lan Fa 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 Lan Fa Textile, you can compare the effects of market volatilities on YuantaP Shares and Lan Fa 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 Lan Fa. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Lan Fa.
Diversification Opportunities for YuantaP Shares and Lan Fa
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between YuantaP and Lan is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Lan Fa Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lan Fa Textile 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 Lan Fa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lan Fa Textile has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Lan Fa go up and down completely randomly.
Pair Corralation between YuantaP Shares and Lan Fa
Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 0.85 times more return on investment than Lan Fa. However, YuantaP shares Taiwan Top is 1.17 times less risky than Lan Fa. It trades about 0.1 of its potential returns per unit of risk. Lan Fa Textile is currently generating about 0.02 per unit of risk. If you would invest 10,811 in YuantaP shares Taiwan Top on August 27, 2024 and sell it today you would earn a total of 8,494 from holding YuantaP shares Taiwan Top or generate 78.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.75% |
| Values | Daily Returns |
YuantaP shares Taiwan Top vs. Lan Fa Textile
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Lan Fa Textile |
YuantaP Shares and Lan Fa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Lan Fa
The main advantage of trading using opposite YuantaP Shares and Lan Fa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Lan Fa 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 Lan Fa will offset losses from the drop in Lan Fa'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 |
| Lan Fa vs. Taiwan Semiconductor Manufacturing | Lan Fa vs. Hon Hai Precision | Lan Fa vs. MediaTek | Lan Fa vs. Chunghwa Telecom Co |
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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