Correlation Between Hua Nan and Yeou Yih
Can any of the company-specific risk be diversified away by investing in both Hua Nan and Yeou Yih 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 Yeou Yih 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 Yeou Yih Steel, you can compare the effects of market volatilities on Hua Nan and Yeou Yih 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 Yeou Yih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Nan and Yeou Yih.
Diversification Opportunities for Hua Nan and Yeou Yih
Excellent diversification
The 3 months correlation between Hua and Yeou is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hua Nan Financial and Yeou Yih Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yeou Yih Steel 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 Yeou Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yeou Yih Steel has no effect on the direction of Hua Nan i.e., Hua Nan and Yeou Yih go up and down completely randomly.
Pair Corralation between Hua Nan and Yeou Yih
Assuming the 90 days trading horizon Hua Nan Financial is expected to generate 1.22 times more return on investment than Yeou Yih. However, Hua Nan is 1.22 times more volatile than Yeou Yih Steel. It trades about 0.27 of its potential returns per unit of risk. Yeou Yih Steel is currently generating about -0.39 per unit of risk. If you would invest 2,555 in Hua Nan Financial on October 21, 2024 and sell it today you would earn a total of 185.00 from holding Hua Nan Financial or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Nan Financial vs. Yeou Yih Steel
Performance |
| Timeline |
| Hua Nan Financial |
| Yeou Yih Steel |
Hua Nan and Yeou Yih Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Nan and Yeou Yih
The main advantage of trading using opposite Hua Nan and Yeou Yih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Nan position performs unexpectedly, Yeou Yih 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 Yeou Yih will offset losses from the drop in Yeou Yih'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 |
| Yeou Yih vs. Fu Burg Industrial | Yeou Yih vs. Tsang Yow Industrial | Yeou Yih vs. Onyx Healthcare | Yeou Yih vs. MedFirst Healthcare Services |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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