Correlation Between Yulon and Chia Ta
Can any of the company-specific risk be diversified away by investing in both Yulon and Chia Ta 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 Chia Ta 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 Chia Ta World, you can compare the effects of market volatilities on Yulon and Chia Ta 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 Chia Ta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Chia Ta.
Diversification Opportunities for Yulon and Chia Ta
Poor diversification
The 3 months correlation between Yulon and Chia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Chia Ta World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Ta World 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 Chia Ta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Ta World has no effect on the direction of Yulon i.e., Yulon and Chia Ta go up and down completely randomly.
Pair Corralation between Yulon and Chia Ta
Assuming the 90 days trading horizon Yulon Motor Co is expected to generate 0.74 times more return on investment than Chia Ta. However, Yulon Motor Co is 1.35 times less risky than Chia Ta. It trades about -0.02 of its potential returns per unit of risk. Chia Ta World is currently generating about -0.09 per unit of risk. If you would invest 5,900 in Yulon Motor Co on August 28, 2024 and sell it today you would lose (90.00) from holding Yulon Motor Co or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Motor Co vs. Chia Ta World
Performance |
| Timeline |
| Yulon Motor |
| Chia Ta World |
Yulon and Chia Ta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Chia Ta
The main advantage of trading using opposite Yulon and Chia Ta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Chia Ta 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 Chia Ta will offset losses from the drop in Chia Ta's long position.| Yulon vs. Taiwan Semiconductor Manufacturing | Yulon vs. Hon Hai Precision | Yulon vs. MediaTek | Yulon vs. Chunghwa Telecom Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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