Correlation Between Cathay DJIA and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both Cathay DJIA 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 DJIA 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 DJIA Inv and YuantaP shares Taiwan Top, you can compare the effects of market volatilities on Cathay DJIA 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 DJIA with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay DJIA and YuantaP Shares.
Diversification Opportunities for Cathay DJIA and YuantaP Shares
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and YuantaP is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cathay DJIA Inv and YuantaP shares Taiwan Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Cathay DJIA 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 DJIA Inv 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 DJIA i.e., Cathay DJIA and YuantaP Shares go up and down completely randomly.
Pair Corralation between Cathay DJIA and YuantaP Shares
Assuming the 90 days trading horizon Cathay DJIA Inv is expected to under-perform the YuantaP Shares. But the etf apears to be less risky and, when comparing its historical volatility, Cathay DJIA Inv is 1.51 times less risky than YuantaP Shares. The etf trades about -0.19 of its potential returns per unit of risk. The YuantaP shares Taiwan Top is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 19,605 in YuantaP shares Taiwan Top on August 27, 2024 and sell it today you would lose (300.00) from holding YuantaP shares Taiwan Top or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cathay DJIA Inv vs. YuantaP shares Taiwan Top
Performance |
| Timeline |
| Cathay DJIA Inv |
| YuantaP shares Taiwan |
Cathay DJIA and YuantaP Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay DJIA and YuantaP Shares
The main advantage of trading using opposite Cathay DJIA and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay DJIA 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.The idea behind Cathay DJIA Inv and YuantaP shares Taiwan Top 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.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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