Correlation Between YuantaP Shares and Cathay Chemical
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Cathay Chemical 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 Chemical 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 Chemical Works, you can compare the effects of market volatilities on YuantaP Shares and Cathay Chemical 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 Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Cathay Chemical.
Diversification Opportunities for YuantaP Shares and Cathay Chemical
-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 Chemical Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Chemical Works 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 Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Chemical Works has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Cathay Chemical go up and down completely randomly.
Pair Corralation between YuantaP Shares and Cathay Chemical
Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 0.71 times more return on investment than Cathay Chemical. However, YuantaP shares Taiwan Top is 1.42 times less risky than Cathay Chemical. It trades about 0.09 of its potential returns per unit of risk. Cathay Chemical Works is currently generating about 0.06 per unit of risk. If you would invest 12,155 in YuantaP shares Taiwan Top on August 31, 2024 and sell it today you would earn a total of 6,570 from holding YuantaP shares Taiwan Top or generate 54.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.9% |
| Values | Daily Returns |
YuantaP shares Taiwan Top vs. Cathay Chemical Works
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Cathay Chemical Works |
YuantaP Shares and Cathay Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Cathay Chemical
The main advantage of trading using opposite YuantaP Shares and Cathay Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Cathay Chemical 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 Chemical will offset losses from the drop in Cathay Chemical's long position.| YuantaP Shares vs. Yuanta Daily Taiwan | YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Yuanta Daily CSI | YuantaP Shares vs. Fubon FTSE Vietnam |
| Cathay Chemical vs. Chung Hwa Chemical | Cathay Chemical vs. China Man Made Fiber | Cathay Chemical vs. Sesoda Corp | Cathay Chemical vs. Everlight Chemical Industrial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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