Correlation Between O Bank and Yuanta Financial
Can any of the company-specific risk be diversified away by investing in both O Bank 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 O Bank and Yuanta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between O Bank Co and Yuanta Financial Holdings, you can compare the effects of market volatilities on O Bank 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 O Bank with a short position of Yuanta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of O Bank and Yuanta Financial.
Diversification Opportunities for O Bank and Yuanta Financial
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 2897 and Yuanta is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding O Bank Co 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 O Bank 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 O Bank Co 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 O Bank i.e., O Bank and Yuanta Financial go up and down completely randomly.
Pair Corralation between O Bank and Yuanta Financial
Assuming the 90 days trading horizon O Bank Co is expected to generate 0.4 times more return on investment than Yuanta Financial. However, O Bank Co is 2.52 times less risky than Yuanta Financial. It trades about 0.17 of its potential returns per unit of risk. Yuanta Financial Holdings is currently generating about -0.16 per unit of risk. If you would invest 983.00 in O Bank Co on November 5, 2024 and sell it today you would earn a total of 10.00 from holding O Bank Co or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
O Bank Co vs. Yuanta Financial Holdings
Performance |
| Timeline |
| O Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Yuanta Financial Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
O Bank and Yuanta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with O Bank and Yuanta Financial
The main advantage of trading using opposite O Bank and Yuanta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if O Bank 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.The idea behind O Bank Co and Yuanta Financial Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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