Correlation Between YuantaP Shares and LandMark Optoelectronics
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and LandMark Optoelectronics 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 LandMark Optoelectronics 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 LandMark Optoelectronics, you can compare the effects of market volatilities on YuantaP Shares and LandMark Optoelectronics 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 LandMark Optoelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and LandMark Optoelectronics.
Diversification Opportunities for YuantaP Shares and LandMark Optoelectronics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YuantaP and LandMark is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and LandMark Optoelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LandMark Optoelectronics 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 LandMark Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LandMark Optoelectronics has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and LandMark Optoelectronics go up and down completely randomly.
Pair Corralation between YuantaP Shares and LandMark Optoelectronics
Assuming the 90 days trading horizon YuantaP Shares is expected to generate 2.16 times less return on investment than LandMark Optoelectronics. But when comparing it to its historical volatility, YuantaP shares Taiwan Electronics is 2.55 times less risky than LandMark Optoelectronics. It trades about 0.1 of its potential returns per unit of risk. LandMark Optoelectronics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,520 in LandMark Optoelectronics on September 3, 2024 and sell it today you would earn a total of 22,780 from holding LandMark Optoelectronics or generate 197.74% 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. LandMark Optoelectronics
Performance |
| Timeline |
| YuantaP shares Taiwan |
| LandMark Optoelectronics |
YuantaP Shares and LandMark Optoelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and LandMark Optoelectronics
The main advantage of trading using opposite YuantaP Shares and LandMark Optoelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, LandMark Optoelectronics 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 LandMark Optoelectronics will offset losses from the drop in LandMark Optoelectronics' long position.| YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Ruentex Development Co | YuantaP Shares vs. Symtek Automation Asia | YuantaP Shares vs. CTCI 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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