Correlation Between YuantaP Shares and Long Chen
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Long Chen 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 Long Chen 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 Long Chen Paper, you can compare the effects of market volatilities on YuantaP Shares and Long Chen 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 Long Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Long Chen.
Diversification Opportunities for YuantaP Shares and Long Chen
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YuantaP and Long is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Long Chen Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Chen Paper 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 Long Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Chen Paper has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Long Chen go up and down completely randomly.
Pair Corralation between YuantaP Shares and Long Chen
Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to generate 0.7 times more return on investment than Long Chen. However, YuantaP shares Taiwan Mid Cap is 1.42 times less risky than Long Chen. It trades about 0.09 of its potential returns per unit of risk. Long Chen Paper is currently generating about -0.03 per unit of risk. If you would invest 5,175 in YuantaP shares Taiwan Mid Cap on September 12, 2024 and sell it today you would earn a total of 2,630 from holding YuantaP shares Taiwan Mid Cap or generate 50.82% 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. Long Chen Paper
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Long Chen Paper |
YuantaP Shares and Long Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Long Chen
The main advantage of trading using opposite YuantaP Shares and Long Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Long Chen 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 Long Chen will offset losses from the drop in Long Chen's long position.| YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. Yuanta Daily Taiwan | YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Yuanta Daily CSI |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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