Correlation Between Hua Nan and Yuanta Financial
Can any of the company-specific risk be diversified away by investing in both Hua Nan 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 Hua Nan and Yuanta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Nan Financial and Yuanta Financial Holdings, you can compare the effects of market volatilities on Hua Nan 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 Hua Nan with a short position of Yuanta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Nan and Yuanta Financial.
Diversification Opportunities for Hua Nan and Yuanta Financial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hua and Yuanta is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hua Nan Financial 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 Hua Nan 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 Hua Nan Financial 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 Hua Nan i.e., Hua Nan and Yuanta Financial go up and down completely randomly.
Pair Corralation between Hua Nan and Yuanta Financial
Assuming the 90 days trading horizon Hua Nan is expected to generate 27.95 times less return on investment than Yuanta Financial. But when comparing it to its historical volatility, Hua Nan Financial is 1.71 times less risky than Yuanta Financial. It trades about 0.0 of its potential returns per unit of risk. Yuanta Financial Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,275 in Yuanta Financial Holdings on August 28, 2024 and sell it today you would earn a total of 40.00 from holding Yuanta Financial Holdings or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Nan Financial vs. Yuanta Financial Holdings
Performance |
| Timeline |
| Hua Nan Financial |
| Yuanta Financial Holdings |
Hua Nan and Yuanta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Nan and Yuanta Financial
The main advantage of trading using opposite Hua Nan and Yuanta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Nan 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.| Hua Nan vs. First Financial Holding | Hua Nan vs. Mega Financial Holding | Hua Nan vs. CTBC Financial Holding | Hua Nan 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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