Correlation Between Taiwan Styrene and Yulon
Can any of the company-specific risk be diversified away by investing in both Taiwan Styrene and Yulon 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 Taiwan Styrene and Yulon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Styrene Monomer and Yulon Motor Co, you can compare the effects of market volatilities on Taiwan Styrene and Yulon 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 Taiwan Styrene with a short position of Yulon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Styrene and Yulon.
Diversification Opportunities for Taiwan Styrene and Yulon
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Yulon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Styrene Monomer and Yulon Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Motor and Taiwan Styrene 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 Taiwan Styrene Monomer are associated (or correlated) with Yulon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Motor has no effect on the direction of Taiwan Styrene i.e., Taiwan Styrene and Yulon go up and down completely randomly.
Pair Corralation between Taiwan Styrene and Yulon
Assuming the 90 days trading horizon Taiwan Styrene Monomer is expected to under-perform the Yulon. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Styrene Monomer is 2.01 times less risky than Yulon. The stock trades about -0.25 of its potential returns per unit of risk. The Yulon Motor Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 5,900 in Yulon Motor Co on August 27, 2024 and sell it today you would lose (180.00) from holding Yulon Motor Co or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Styrene Monomer vs. Yulon Motor Co
Performance |
| Timeline |
| Taiwan Styrene Monomer |
| Yulon Motor |
Taiwan Styrene and Yulon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Styrene and Yulon
The main advantage of trading using opposite Taiwan Styrene and Yulon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Styrene position performs unexpectedly, Yulon 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 Yulon will offset losses from the drop in Yulon's long position.| Taiwan Styrene vs. Grand Pacific Petrochemical | Taiwan Styrene vs. USI Corp | Taiwan Styrene vs. Asia Polymer Corp | Taiwan Styrene vs. China Petrochemical Development |
| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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