Correlation Between YuantaP Shares and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Tehmag Foods 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 Tehmag Foods 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 Tehmag Foods, you can compare the effects of market volatilities on YuantaP Shares and Tehmag Foods 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 Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Tehmag Foods.
Diversification Opportunities for YuantaP Shares and Tehmag Foods
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between YuantaP and Tehmag is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods 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 Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Tehmag Foods go up and down completely randomly.
Pair Corralation between YuantaP Shares and Tehmag Foods
Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to generate 3.4 times more return on investment than Tehmag Foods. However, YuantaP Shares is 3.4 times more volatile than Tehmag Foods. It trades about 0.05 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.04 per unit of risk. If you would invest 9,175 in YuantaP shares Taiwan Electronics on August 28, 2024 and sell it today you would earn a total of 995.00 from holding YuantaP shares Taiwan Electronics or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
YuantaP shares Taiwan Electron vs. Tehmag Foods
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Tehmag Foods |
YuantaP Shares and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Tehmag Foods
The main advantage of trading using opposite YuantaP Shares and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.The idea behind YuantaP shares Taiwan Electronics and Tehmag Foods 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.| Tehmag Foods vs. Grand Pacific Petrochemical | Tehmag Foods vs. Sunspring Metal Corp | Tehmag Foods vs. Acelon Chemicals Fiber | Tehmag Foods vs. Chi Sheng Chemical |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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