Correlation Between Taichung Commercial and Yuanta Financial
Can any of the company-specific risk be diversified away by investing in both Taichung Commercial and Yuanta Financial 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 Taichung Commercial and Yuanta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taichung Commercial Bank and Yuanta Financial Holdings, you can compare the effects of market volatilities on Taichung Commercial and Yuanta Financial 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 Taichung Commercial with a short position of Yuanta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taichung Commercial and Yuanta Financial.
Diversification Opportunities for Taichung Commercial and Yuanta Financial
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taichung and Yuanta is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Taichung Commercial Bank and Yuanta Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Financial Holdings and Taichung Commercial 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 Taichung Commercial Bank are associated (or correlated) with Yuanta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Financial Holdings has no effect on the direction of Taichung Commercial i.e., Taichung Commercial and Yuanta Financial go up and down completely randomly.
Pair Corralation between Taichung Commercial and Yuanta Financial
Assuming the 90 days trading horizon Taichung Commercial Bank is expected to generate 0.83 times more return on investment than Yuanta Financial. However, Taichung Commercial Bank is 1.21 times less risky than Yuanta Financial. It trades about 0.19 of its potential returns per unit of risk. Yuanta Financial Holdings is currently generating about 0.09 per unit of risk. If you would invest 1,790 in Taichung Commercial Bank on August 29, 2024 and sell it today you would earn a total of 70.00 from holding Taichung Commercial Bank or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taichung Commercial Bank vs. Yuanta Financial Holdings
Performance |
| Timeline |
| Taichung Commercial Bank |
| Yuanta Financial Holdings |
Taichung Commercial and Yuanta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taichung Commercial and Yuanta Financial
The main advantage of trading using opposite Taichung Commercial and Yuanta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taichung Commercial position performs unexpectedly, Yuanta Financial 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 Yuanta Financial will offset losses from the drop in Yuanta Financial's long position.| Taichung Commercial vs. Taiwan Business Bank | Taichung Commercial vs. Taishin Financial Holding | Taichung Commercial vs. Hua Nan Financial | Taichung Commercial vs. ESUN Financial Holding |
| Yuanta Financial vs. CTBC Financial Holding | Yuanta Financial vs. Fubon Financial Holding | Yuanta Financial vs. Cathay Financial Holding | Yuanta Financial vs. Mega Financial Holding |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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