Correlation Between YuantaP Shares and Cheng Loong
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Cheng Loong 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 Cheng Loong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YuantaP shares Taiwan Mid Cap and Cheng Loong Corp, you can compare the effects of market volatilities on YuantaP Shares and Cheng Loong 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 Cheng Loong. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Cheng Loong.
Diversification Opportunities for YuantaP Shares and Cheng Loong
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YuantaP and Cheng is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Cheng Loong Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Loong Corp 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 Mid Cap are associated (or correlated) with Cheng Loong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Loong Corp has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Cheng Loong go up and down completely randomly.
Pair Corralation between YuantaP Shares and Cheng Loong
Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to generate 0.78 times more return on investment than Cheng Loong. However, YuantaP shares Taiwan Mid Cap is 1.28 times less risky than Cheng Loong. It trades about 0.08 of its potential returns per unit of risk. Cheng Loong Corp is currently generating about -0.03 per unit of risk. If you would invest 5,230 in YuantaP shares Taiwan Mid Cap on September 3, 2024 and sell it today you would earn a total of 2,455 from holding YuantaP shares Taiwan Mid Cap or generate 46.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YuantaP shares Taiwan Mid Cap vs. Cheng Loong Corp
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Cheng Loong Corp |
YuantaP Shares and Cheng Loong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Cheng Loong
The main advantage of trading using opposite YuantaP Shares and Cheng Loong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Cheng Loong 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 Cheng Loong will offset losses from the drop in Cheng Loong's long position.| YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Ruentex Development Co | YuantaP Shares vs. Symtek Automation Asia | YuantaP Shares vs. CTCI Corp |
| Cheng Loong vs. YFY Inc | Cheng Loong vs. Long Chen Paper | Cheng Loong vs. Chung Hwa Pulp | Cheng Loong vs. Nan Ya Plastics |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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