Correlation Between YuantaP Shares and Long Bon
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Long Bon 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 Bon 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 Bon International, you can compare the effects of market volatilities on YuantaP Shares and Long Bon 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 Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Long Bon.
Diversification Opportunities for YuantaP Shares and Long Bon
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between YuantaP and Long is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International 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 Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Long Bon go up and down completely randomly.
Pair Corralation between YuantaP Shares and Long Bon
Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to generate 1.31 times more return on investment than Long Bon. However, YuantaP Shares is 1.31 times more volatile than Long Bon International. It trades about -0.03 of its potential returns per unit of risk. Long Bon International is currently generating about -0.28 per unit of risk. If you would invest 7,770 in YuantaP shares Taiwan Mid Cap on November 5, 2024 and sell it today you would lose (40.00) from holding YuantaP shares Taiwan Mid Cap or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 93.33% |
| Values | Daily Returns |
YuantaP shares Taiwan Mid Cap vs. Long Bon International
Performance |
| Timeline |
| YuantaP shares Taiwan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Long Bon International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
YuantaP Shares and Long Bon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Long Bon
The main advantage of trading using opposite YuantaP Shares and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Long Bon 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 Bon will offset losses from the drop in Long Bon's long position.The idea behind YuantaP shares Taiwan Mid Cap and Long Bon International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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