Correlation Between YuantaP Shares and Elite Material
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Elite Material 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 Elite Material 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 Elite Material Co, you can compare the effects of market volatilities on YuantaP Shares and Elite Material 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 Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Elite Material.
Diversification Opportunities for YuantaP Shares and Elite Material
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between YuantaP and Elite is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material 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 Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Elite Material go up and down completely randomly.
Pair Corralation between YuantaP Shares and Elite Material
Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to under-perform the Elite Material. But the etf apears to be less risky and, when comparing its historical volatility, YuantaP shares Taiwan Electronics is 1.84 times less risky than Elite Material. The etf trades about -0.15 of its potential returns per unit of risk. The Elite Material Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 42,700 in Elite Material Co on September 2, 2024 and sell it today you would earn a total of 4,150 from holding Elite Material Co or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YuantaP shares Taiwan Electron vs. Elite Material Co
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Elite Material |
YuantaP Shares and Elite Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Elite Material
The main advantage of trading using opposite YuantaP Shares and Elite Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Elite Material 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 Elite Material will offset losses from the drop in Elite Material's long position.The idea behind YuantaP shares Taiwan Electronics and Elite Material Co 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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