Correlation Between Yulon and Taiwan Styrene
Can any of the company-specific risk be diversified away by investing in both Yulon and Taiwan Styrene 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 Yulon and Taiwan Styrene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Motor Co and Taiwan Styrene Monomer, you can compare the effects of market volatilities on Yulon and Taiwan Styrene 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 Yulon with a short position of Taiwan Styrene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Taiwan Styrene.
Diversification Opportunities for Yulon and Taiwan Styrene
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yulon and Taiwan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Taiwan Styrene Monomer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Styrene Monomer and Yulon 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 Yulon Motor Co are associated (or correlated) with Taiwan Styrene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Styrene Monomer has no effect on the direction of Yulon i.e., Yulon and Taiwan Styrene go up and down completely randomly.
Pair Corralation between Yulon and Taiwan Styrene
Assuming the 90 days trading horizon Yulon Motor Co is expected to under-perform the Taiwan Styrene. In addition to that, Yulon is 1.07 times more volatile than Taiwan Styrene Monomer. It trades about -0.09 of its total potential returns per unit of risk. Taiwan Styrene Monomer is currently generating about 0.05 per unit of volatility. If you would invest 1,000.00 in Taiwan Styrene Monomer on October 22, 2024 and sell it today you would earn a total of 20.00 from holding Taiwan Styrene Monomer or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Motor Co vs. Taiwan Styrene Monomer
Performance |
| Timeline |
| Yulon Motor |
| Taiwan Styrene Monomer |
Yulon and Taiwan Styrene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Taiwan Styrene
The main advantage of trading using opposite Yulon and Taiwan Styrene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Taiwan Styrene 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 Taiwan Styrene will offset losses from the drop in Taiwan Styrene's long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Taiwan Styrene vs. Grand Pacific Petrochemical | Taiwan Styrene vs. USI Corp | Taiwan Styrene vs. Asia Polymer Corp | Taiwan Styrene vs. China Petrochemical Development |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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