Correlation Between YuantaP Shares and Cathay TAIEX
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Cathay TAIEX 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 Cathay TAIEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YuantaP shares Taiwan Electronics and Cathay TAIEX Daily, you can compare the effects of market volatilities on YuantaP Shares and Cathay TAIEX 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 Cathay TAIEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Cathay TAIEX.
Diversification Opportunities for YuantaP Shares and Cathay TAIEX
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between YuantaP and Cathay is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Cathay TAIEX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay TAIEX Daily 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 Electronics are associated (or correlated) with Cathay TAIEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay TAIEX Daily has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Cathay TAIEX go up and down completely randomly.
Pair Corralation between YuantaP Shares and Cathay TAIEX
Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to generate 1.2 times more return on investment than Cathay TAIEX. However, YuantaP Shares is 1.2 times more volatile than Cathay TAIEX Daily. It trades about 0.1 of its potential returns per unit of risk. Cathay TAIEX Daily is currently generating about -0.09 per unit of risk. If you would invest 6,780 in YuantaP shares Taiwan Electronics on September 1, 2024 and sell it today you would earn a total of 3,050 from holding YuantaP shares Taiwan Electronics or generate 44.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YuantaP shares Taiwan Electron vs. Cathay TAIEX Daily
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Cathay TAIEX Daily |
YuantaP Shares and Cathay TAIEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Cathay TAIEX
The main advantage of trading using opposite YuantaP Shares and Cathay TAIEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Cathay TAIEX 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 Cathay TAIEX will offset losses from the drop in Cathay TAIEX's long position.| YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. YuantaP shares MSCI Taiwan | YuantaP Shares vs. YuantaP shares Taiwan GreTai | YuantaP Shares vs. YuantaP shares SSE50 |
| Cathay TAIEX vs. Cathay TIP TAIEX | Cathay TAIEX vs. Cathay Nasdaq AI | Cathay TAIEX vs. Cathay Dow Jones | Cathay TAIEX vs. Cathay Bloomberg Barclays |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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