Correlation Between Cathay TAIEX and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both Cathay TAIEX and YuantaP Shares 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 Cathay TAIEX and YuantaP Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay TAIEX Daily and YuantaP shares Taiwan Dividend, you can compare the effects of market volatilities on Cathay TAIEX and YuantaP Shares 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 Cathay TAIEX with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay TAIEX and YuantaP Shares.
Diversification Opportunities for Cathay TAIEX and YuantaP Shares
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cathay and YuantaP is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cathay TAIEX Daily and YuantaP shares Taiwan Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Cathay TAIEX 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 Cathay TAIEX Daily are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of Cathay TAIEX i.e., Cathay TAIEX and YuantaP Shares go up and down completely randomly.
Pair Corralation between Cathay TAIEX and YuantaP Shares
Assuming the 90 days trading horizon Cathay TAIEX Daily is expected to under-perform the YuantaP Shares. In addition to that, Cathay TAIEX is 1.26 times more volatile than YuantaP shares Taiwan Dividend. It trades about -0.11 of its total potential returns per unit of risk. YuantaP shares Taiwan Dividend is currently generating about 0.08 per unit of volatility. If you would invest 3,027 in YuantaP shares Taiwan Dividend on August 25, 2024 and sell it today you would earn a total of 706.00 from holding YuantaP shares Taiwan Dividend or generate 23.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay TAIEX Daily vs. YuantaP shares Taiwan Dividend
Performance |
| Timeline |
| Cathay TAIEX Daily |
| YuantaP shares Taiwan |
Cathay TAIEX and YuantaP Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay TAIEX and YuantaP Shares
The main advantage of trading using opposite Cathay TAIEX and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay TAIEX position performs unexpectedly, YuantaP Shares 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 YuantaP Shares will offset losses from the drop in YuantaP Shares' long position.| Cathay TAIEX vs. YuantaP shares Taiwan Top | Cathay TAIEX vs. Cathay Taiwan 5G | Cathay TAIEX vs. Yuanta Daily CSI | Cathay TAIEX vs. Fuh Hwa Emerging |
| YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. YuantaP shares MSCI Taiwan | YuantaP Shares vs. YuantaP shares Taiwan GreTai | YuantaP Shares vs. YuantaP shares SSE50 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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