Correlation Between YuantaP Shares and HiTi Digital
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and HiTi Digital 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 HiTi Digital 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 HiTi Digital, you can compare the effects of market volatilities on YuantaP Shares and HiTi Digital 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 HiTi Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and HiTi Digital.
Diversification Opportunities for YuantaP Shares and HiTi Digital
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between YuantaP and HiTi is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and HiTi Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HiTi Digital 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 HiTi Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HiTi Digital has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and HiTi Digital go up and down completely randomly.
Pair Corralation between YuantaP Shares and HiTi Digital
Assuming the 90 days trading horizon YuantaP Shares is expected to generate 2.56 times less return on investment than HiTi Digital. But when comparing it to its historical volatility, YuantaP shares Taiwan Top is 4.95 times less risky than HiTi Digital. It trades about 0.11 of its potential returns per unit of risk. HiTi Digital is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 678.00 in HiTi Digital on August 26, 2024 and sell it today you would earn a total of 1,073 from holding HiTi Digital or generate 158.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.96% |
| Values | Daily Returns |
YuantaP shares Taiwan Top vs. HiTi Digital
Performance |
| Timeline |
| YuantaP shares Taiwan |
| HiTi Digital |
YuantaP Shares and HiTi Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and HiTi Digital
The main advantage of trading using opposite YuantaP Shares and HiTi Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, HiTi Digital 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 HiTi Digital will offset losses from the drop in HiTi Digital's long position.| YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Yuanta Daily CSI | YuantaP Shares vs. Fuh Hwa Emerging | YuantaP Shares vs. Paradigm SP GSCI |
| HiTi Digital vs. Novatek Microelectronics Corp | HiTi Digital vs. Quanta Computer | HiTi Digital vs. United Microelectronics |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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