Correlation Between YuantaP Shares and Kaori Heat
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Kaori Heat 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 Kaori Heat 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 Kaori Heat Treatment, you can compare the effects of market volatilities on YuantaP Shares and Kaori Heat 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 Kaori Heat. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Kaori Heat.
Diversification Opportunities for YuantaP Shares and Kaori Heat
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between YuantaP and Kaori is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Kaori Heat Treatment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaori Heat Treatment 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 Kaori Heat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaori Heat Treatment has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Kaori Heat go up and down completely randomly.
Pair Corralation between YuantaP Shares and Kaori Heat
Assuming the 90 days trading horizon YuantaP Shares is expected to generate 1.1 times less return on investment than Kaori Heat. But when comparing it to its historical volatility, YuantaP shares Taiwan Electronics is 2.36 times less risky than Kaori Heat. It trades about 0.1 of its potential returns per unit of risk. Kaori Heat Treatment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26,300 in Kaori Heat Treatment on September 2, 2024 and sell it today you would earn a total of 7,650 from holding Kaori Heat Treatment or generate 29.09% 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. Kaori Heat Treatment
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Kaori Heat Treatment |
YuantaP Shares and Kaori Heat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Kaori Heat
The main advantage of trading using opposite YuantaP Shares and Kaori Heat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Kaori Heat 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 Kaori Heat will offset losses from the drop in Kaori Heat's long position.The idea behind YuantaP shares Taiwan Electronics and Kaori Heat Treatment 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.| Kaori Heat vs. BES Engineering Co | Kaori Heat vs. Continental Holdings Corp | Kaori Heat vs. Kee Tai Properties | Kaori Heat vs. Hung Sheng Construction |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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