Correlation Between YuantaP Shares and Cheng Shin
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Cheng Shin 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 Cheng Shin 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 Cheng Shin Rubber, you can compare the effects of market volatilities on YuantaP Shares and Cheng Shin 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 Cheng Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Cheng Shin.
Diversification Opportunities for YuantaP Shares and Cheng Shin
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between YuantaP and Cheng is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Cheng Shin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Shin Rubber 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 Cheng Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Shin Rubber has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Cheng Shin go up and down completely randomly.
Pair Corralation between YuantaP Shares and Cheng Shin
Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to under-perform the Cheng Shin. But the etf apears to be less risky and, when comparing its historical volatility, YuantaP shares Taiwan Electronics is 2.67 times less risky than Cheng Shin. The etf trades about -0.18 of its potential returns per unit of risk. The Cheng Shin Rubber is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,640 in Cheng Shin Rubber on August 29, 2024 and sell it today you would earn a total of 390.00 from holding Cheng Shin Rubber or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YuantaP shares Taiwan Electron vs. Cheng Shin Rubber
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Cheng Shin Rubber |
YuantaP Shares and Cheng Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Cheng Shin
The main advantage of trading using opposite YuantaP Shares and Cheng Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Cheng Shin 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 Cheng Shin will offset losses from the drop in Cheng Shin's long position.The idea behind YuantaP shares Taiwan Electronics and Cheng Shin Rubber 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.| Cheng Shin vs. Uni President Enterprises Corp | Cheng Shin vs. Formosa Chemicals Fibre | Cheng Shin vs. Asia Cement Corp | Cheng Shin vs. Pou Chen Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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