Correlation Between YuantaP Shares and Allied Circuit
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Allied Circuit 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 Allied Circuit 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 Allied Circuit Co, you can compare the effects of market volatilities on YuantaP Shares and Allied Circuit 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 Allied Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Allied Circuit.
Diversification Opportunities for YuantaP Shares and Allied Circuit
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YuantaP and Allied is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Allied Circuit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Circuit 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 Allied Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Circuit has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Allied Circuit go up and down completely randomly.
Pair Corralation between YuantaP Shares and Allied Circuit
Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to generate 0.48 times more return on investment than Allied Circuit. However, YuantaP shares Taiwan Electronics is 2.09 times less risky than Allied Circuit. It trades about 0.1 of its potential returns per unit of risk. Allied Circuit Co is currently generating about 0.02 per unit of risk. If you would invest 5,410 in YuantaP shares Taiwan Electronics on September 3, 2024 and sell it today you would earn a total of 4,420 from holding YuantaP shares Taiwan Electronics or generate 81.7% 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. Allied Circuit Co
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Allied Circuit |
YuantaP Shares and Allied Circuit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Allied Circuit
The main advantage of trading using opposite YuantaP Shares and Allied Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Allied Circuit 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 Allied Circuit will offset losses from the drop in Allied Circuit's 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 |
| Allied Circuit vs. Taichung Commercial Bank | Allied Circuit vs. Pontex Polyblend CoLtd | Allied Circuit vs. AVerMedia Technologies | Allied Circuit vs. Cathay Financial Holding |
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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