Correlation Between Mega Financial and Yeou Yih
Can any of the company-specific risk be diversified away by investing in both Mega Financial 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 Mega Financial and Yeou Yih into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mega Financial Holding and Yeou Yih Steel, you can compare the effects of market volatilities on Mega Financial 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 Mega Financial with a short position of Yeou Yih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and Yeou Yih.
Diversification Opportunities for Mega Financial and Yeou Yih
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mega and Yeou is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding 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 Mega 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 Mega Financial Holding 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 Mega Financial i.e., Mega Financial and Yeou Yih go up and down completely randomly.
Pair Corralation between Mega Financial and Yeou Yih
Assuming the 90 days trading horizon Mega Financial Holding is expected to generate 0.65 times more return on investment than Yeou Yih. However, Mega Financial Holding is 1.53 times less risky than Yeou Yih. It trades about -0.18 of its potential returns per unit of risk. Yeou Yih Steel is currently generating about -0.5 per unit of risk. If you would invest 3,945 in Mega Financial Holding on October 13, 2024 and sell it today you would lose (100.00) from holding Mega Financial Holding or give up 2.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Mega Financial Holding vs. Yeou Yih Steel
Performance |
Timeline |
Mega Financial Holding |
Yeou Yih Steel |
Mega Financial and Yeou Yih Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mega Financial and Yeou Yih
The main advantage of trading using opposite Mega Financial and Yeou Yih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Financial 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.Mega Financial vs. CTBC Financial Holding | Mega Financial vs. Fubon Financial Holding | Mega Financial vs. First Financial Holding | Mega Financial vs. Cathay Financial Holding |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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