Correlation Between YuantaP Shares and IBASE Technology
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and IBASE Technology 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 IBASE Technology 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 IBASE Technology, you can compare the effects of market volatilities on YuantaP Shares and IBASE Technology 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 IBASE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and IBASE Technology.
Diversification Opportunities for YuantaP Shares and IBASE Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YuantaP and IBASE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and IBASE Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBASE Technology 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 IBASE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBASE Technology has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and IBASE Technology go up and down completely randomly.
Pair Corralation between YuantaP Shares and IBASE Technology
Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to generate 1.02 times more return on investment than IBASE Technology. However, YuantaP Shares is 1.02 times more volatile than IBASE Technology. It trades about -0.14 of its potential returns per unit of risk. IBASE Technology is currently generating about -0.19 per unit of risk. If you would invest 10,520 in YuantaP shares Taiwan Electronics on August 27, 2024 and sell it today you would lose (365.00) from holding YuantaP shares Taiwan Electronics or give up 3.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YuantaP shares Taiwan Electron vs. IBASE Technology
Performance |
| Timeline |
| YuantaP shares Taiwan |
| IBASE Technology |
YuantaP Shares and IBASE Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and IBASE Technology
The main advantage of trading using opposite YuantaP Shares and IBASE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, IBASE Technology 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 IBASE Technology will offset losses from the drop in IBASE Technology's long position.The idea behind YuantaP shares Taiwan Electronics and IBASE Technology 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.| IBASE Technology vs. Axiomtek Co | IBASE Technology vs. Lanner Electronics | IBASE Technology vs. IEI Integration Corp | IBASE Technology vs. Advantech 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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