Correlation Between YuantaP Shares and Chung Lien
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Chung Lien 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 Chung Lien 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 Chung Lien Transportation, you can compare the effects of market volatilities on YuantaP Shares and Chung Lien 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 Chung Lien. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Chung Lien.
Diversification Opportunities for YuantaP Shares and Chung Lien
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between YuantaP and Chung is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Chung Lien Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Lien Transportation 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 Chung Lien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Lien Transportation has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Chung Lien go up and down completely randomly.
Pair Corralation between YuantaP Shares and Chung Lien
Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to under-perform the Chung Lien. In addition to that, YuantaP Shares is 1.84 times more volatile than Chung Lien Transportation. It trades about -0.06 of its total potential returns per unit of risk. Chung Lien Transportation is currently generating about -0.04 per unit of volatility. If you would invest 4,325 in Chung Lien Transportation on August 28, 2024 and sell it today you would lose (65.00) from holding Chung Lien Transportation or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YuantaP shares Taiwan Mid Cap vs. Chung Lien Transportation
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Chung Lien Transportation |
YuantaP Shares and Chung Lien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Chung Lien
The main advantage of trading using opposite YuantaP Shares and Chung Lien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Chung Lien 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 Chung Lien will offset losses from the drop in Chung Lien's long position.The idea behind YuantaP shares Taiwan Mid Cap and Chung Lien Transportation 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.| Chung Lien vs. Kerry TJ Logistics | Chung Lien vs. Shan Loong Transportation Co | Chung Lien vs. YuantaP shares Taiwan Mid Cap | Chung Lien vs. YuantaP shares Taiwan Electronics |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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