Correlation Between YuantaP Shares and Johnson Health
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Johnson Health 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 Johnson Health 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 Johnson Health Tech, you can compare the effects of market volatilities on YuantaP Shares and Johnson Health 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 Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Johnson Health.
Diversification Opportunities for YuantaP Shares and Johnson Health
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YuantaP and Johnson is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Johnson Health Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Health Tech 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 Johnson Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Health Tech has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Johnson Health go up and down completely randomly.
Pair Corralation between YuantaP Shares and Johnson Health
Assuming the 90 days trading horizon YuantaP Shares is expected to generate 5.92 times less return on investment than Johnson Health. But when comparing it to its historical volatility, YuantaP shares Taiwan Electronics is 2.96 times less risky than Johnson Health. It trades about 0.05 of its potential returns per unit of risk. Johnson Health Tech is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 13,250 in Johnson Health Tech on August 25, 2024 and sell it today you would earn a total of 1,950 from holding Johnson Health Tech or generate 14.72% 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 Electron vs. Johnson Health Tech
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Johnson Health Tech |
YuantaP Shares and Johnson Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Johnson Health
The main advantage of trading using opposite YuantaP Shares and Johnson Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Johnson Health 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 Johnson Health will offset losses from the drop in Johnson Health's long position.| YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Yuanta Daily CSI | YuantaP Shares vs. Fuh Hwa Emerging |
| Johnson Health vs. Taiwan Semiconductor Manufacturing | Johnson Health vs. Hon Hai Precision | Johnson Health vs. MediaTek | Johnson Health vs. Chunghwa Telecom Co |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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