Correlation Between YuantaP Shares and Cathay Koreataiwan
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Cathay Koreataiwan 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 Cathay Koreataiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YuantaP shares MSCI Taiwan and Cathay Koreataiwan IT, you can compare the effects of market volatilities on YuantaP Shares and Cathay Koreataiwan 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 Cathay Koreataiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Cathay Koreataiwan.
Diversification Opportunities for YuantaP Shares and Cathay Koreataiwan
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between YuantaP and Cathay is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares MSCI Taiwan and Cathay Koreataiwan IT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Koreataiwan 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 MSCI Taiwan are associated (or correlated) with Cathay Koreataiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Koreataiwan has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Cathay Koreataiwan go up and down completely randomly.
Pair Corralation between YuantaP Shares and Cathay Koreataiwan
Assuming the 90 days trading horizon YuantaP shares MSCI Taiwan is expected to generate 0.87 times more return on investment than Cathay Koreataiwan. However, YuantaP shares MSCI Taiwan is 1.15 times less risky than Cathay Koreataiwan. It trades about 0.09 of its potential returns per unit of risk. Cathay Koreataiwan IT is currently generating about 0.04 per unit of risk. If you would invest 5,615 in YuantaP shares MSCI Taiwan on September 3, 2024 and sell it today you would earn a total of 3,190 from holding YuantaP shares MSCI Taiwan or generate 56.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YuantaP shares MSCI Taiwan vs. Cathay Koreataiwan IT
Performance |
| Timeline |
| YuantaP shares MSCI |
| Cathay Koreataiwan |
YuantaP Shares and Cathay Koreataiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Cathay Koreataiwan
The main advantage of trading using opposite YuantaP Shares and Cathay Koreataiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Cathay Koreataiwan 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 Cathay Koreataiwan will offset losses from the drop in Cathay Koreataiwan's long position.| YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. YuantaP shares Taiwan GreTai | YuantaP Shares vs. YuantaP shares SSE50 | YuantaP Shares vs. YuantaP shares Taiwan Mid Cap |
| Cathay Koreataiwan vs. Cathay TIP TAIEX | Cathay Koreataiwan vs. Cathay Nasdaq AI | Cathay Koreataiwan vs. Cathay Dow Jones | Cathay Koreataiwan vs. Cathay Bloomberg Barclays |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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