Correlation Between Yuanta EURO and Yuanta Daily
Can any of the company-specific risk be diversified away by investing in both Yuanta EURO and Yuanta Daily 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 EURO and Yuanta Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yuanta EURO STOXX and Yuanta Daily SP, you can compare the effects of market volatilities on Yuanta EURO and Yuanta Daily 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 EURO with a short position of Yuanta Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta EURO and Yuanta Daily.
Diversification Opportunities for Yuanta EURO and Yuanta Daily
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yuanta and Yuanta is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta EURO STOXX and Yuanta Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily SP and Yuanta EURO 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 EURO STOXX are associated (or correlated) with Yuanta Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Daily SP has no effect on the direction of Yuanta EURO i.e., Yuanta EURO and Yuanta Daily go up and down completely randomly.
Pair Corralation between Yuanta EURO and Yuanta Daily
Assuming the 90 days trading horizon Yuanta EURO STOXX is expected to generate 0.98 times more return on investment than Yuanta Daily. However, Yuanta EURO STOXX is 1.02 times less risky than Yuanta Daily. It trades about 0.05 of its potential returns per unit of risk. Yuanta Daily SP is currently generating about -0.08 per unit of risk. If you would invest 2,882 in Yuanta EURO STOXX on August 28, 2024 and sell it today you would earn a total of 559.00 from holding Yuanta EURO STOXX or generate 19.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuanta EURO STOXX vs. Yuanta Daily SP
Performance |
| Timeline |
| Yuanta EURO STOXX |
| Yuanta Daily SP |
Yuanta EURO and Yuanta Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuanta EURO and Yuanta Daily
The main advantage of trading using opposite Yuanta EURO and Yuanta Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanta EURO position performs unexpectedly, Yuanta Daily 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 Yuanta Daily will offset losses from the drop in Yuanta Daily's long position.The idea behind Yuanta EURO STOXX and Yuanta Daily SP 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.| Yuanta Daily vs. Yuanta Securities Investment | Yuanta Daily vs. Yuanta SP GSCI | Yuanta Daily vs. Yuanta Global NexGen | Yuanta Daily vs. Yuanta SP GSCI |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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