Correlation Between Yuan High and Top Union
Can any of the company-specific risk be diversified away by investing in both Yuan High and Top Union 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 Yuan High and Top Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yuan High Tech Development and Top Union Electronics, you can compare the effects of market volatilities on Yuan High and Top Union 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 Yuan High with a short position of Top Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuan High and Top Union.
Diversification Opportunities for Yuan High and Top Union
Good diversification
The 3 months correlation between Yuan and Top is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Yuan High Tech Development and Top Union Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Union Electronics and Yuan High 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 Yuan High Tech Development are associated (or correlated) with Top Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Union Electronics has no effect on the direction of Yuan High i.e., Yuan High and Top Union go up and down completely randomly.
Pair Corralation between Yuan High and Top Union
Assuming the 90 days trading horizon Yuan High Tech Development is expected to generate 2.14 times more return on investment than Top Union. However, Yuan High is 2.14 times more volatile than Top Union Electronics. It trades about 0.06 of its potential returns per unit of risk. Top Union Electronics is currently generating about 0.03 per unit of risk. If you would invest 9,005 in Yuan High Tech Development on December 16, 2024 and sell it today you would earn a total of 9,695 from holding Yuan High Tech Development or generate 107.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuan High Tech Development vs. Top Union Electronics
Performance |
| Timeline |
| Yuan High Tech |
| Top Union Electronics |
Yuan High and Top Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuan High and Top Union
The main advantage of trading using opposite Yuan High and Top Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuan High position performs unexpectedly, Top Union 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 Top Union will offset losses from the drop in Top Union's long position.| Yuan High vs. Huang Hsiang Construction | ||
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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