Correlation Between Yuanta Daily and Fuh Hwa
Can any of the company-specific risk be diversified away by investing in both Yuanta Daily and Fuh Hwa 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 Yuanta Daily and Fuh Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yuanta Daily Taiwan and Fuh Hwa Daily, you can compare the effects of market volatilities on Yuanta Daily and Fuh Hwa 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 Yuanta Daily with a short position of Fuh Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta Daily and Fuh Hwa.
Diversification Opportunities for Yuanta Daily and Fuh Hwa
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yuanta and Fuh is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Daily Taiwan and Fuh Hwa Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuh Hwa Daily and Yuanta Daily 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 Yuanta Daily Taiwan are associated (or correlated) with Fuh Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuh Hwa Daily has no effect on the direction of Yuanta Daily i.e., Yuanta Daily and Fuh Hwa go up and down completely randomly.
Pair Corralation between Yuanta Daily and Fuh Hwa
Assuming the 90 days trading horizon Yuanta Daily is expected to generate 1.82 times less return on investment than Fuh Hwa. But when comparing it to its historical volatility, Yuanta Daily Taiwan is 1.36 times less risky than Fuh Hwa. It trades about 0.17 of its potential returns per unit of risk. Fuh Hwa Daily is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 718.00 in Fuh Hwa Daily on August 24, 2024 and sell it today you would earn a total of 45.00 from holding Fuh Hwa Daily or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuanta Daily Taiwan vs. Fuh Hwa Daily
Performance |
| Timeline |
| Yuanta Daily Taiwan |
| Fuh Hwa Daily |
Yuanta Daily and Fuh Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuanta Daily and Fuh Hwa
The main advantage of trading using opposite Yuanta Daily and Fuh Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanta Daily position performs unexpectedly, Fuh Hwa 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 Fuh Hwa will offset losses from the drop in Fuh Hwa's long position.| Yuanta Daily vs. YuantaP shares Taiwan Top | Yuanta Daily vs. Cathay Taiwan 5G | Yuanta Daily vs. Yuanta Daily CSI | Yuanta Daily vs. Cathay Sustainability High |
| Fuh Hwa vs. YuantaP shares Taiwan Top | Fuh Hwa vs. Yuanta Daily Taiwan | Fuh Hwa vs. Cathay Taiwan 5G | Fuh Hwa vs. Yuanta Daily CSI |
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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