Correlation Between Yuanta Financial and GeneReach Biotechnology
Can any of the company-specific risk be diversified away by investing in both Yuanta Financial and GeneReach Biotechnology 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 Yuanta Financial and GeneReach Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yuanta Financial Holdings and GeneReach Biotechnology, you can compare the effects of market volatilities on Yuanta Financial and GeneReach Biotechnology 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 Yuanta Financial with a short position of GeneReach Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta Financial and GeneReach Biotechnology.
Diversification Opportunities for Yuanta Financial and GeneReach Biotechnology
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yuanta and GeneReach is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Financial Holdings and GeneReach Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneReach Biotechnology and Yuanta Financial 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 Yuanta Financial Holdings are associated (or correlated) with GeneReach Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneReach Biotechnology has no effect on the direction of Yuanta Financial i.e., Yuanta Financial and GeneReach Biotechnology go up and down completely randomly.
Pair Corralation between Yuanta Financial and GeneReach Biotechnology
Assuming the 90 days trading horizon Yuanta Financial Holdings is expected to under-perform the GeneReach Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Yuanta Financial Holdings is 1.68 times less risky than GeneReach Biotechnology. The stock trades about -0.16 of its potential returns per unit of risk. The GeneReach Biotechnology is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,790 in GeneReach Biotechnology on November 7, 2024 and sell it today you would lose (70.00) from holding GeneReach Biotechnology or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuanta Financial Holdings vs. GeneReach Biotechnology
Performance |
| Timeline |
| Yuanta Financial Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| GeneReach Biotechnology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yuanta Financial and GeneReach Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuanta Financial and GeneReach Biotechnology
The main advantage of trading using opposite Yuanta Financial and GeneReach Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanta Financial position performs unexpectedly, GeneReach Biotechnology 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 GeneReach Biotechnology will offset losses from the drop in GeneReach Biotechnology's long position.The idea behind Yuanta Financial Holdings and GeneReach Biotechnology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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