Correlation Between Lungyen Life and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both Lungyen Life and YuantaP Shares 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 Lungyen Life and YuantaP Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lungyen Life Service and YuantaP shares Taiwan Electronics, you can compare the effects of market volatilities on Lungyen Life and YuantaP Shares 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 Lungyen Life with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lungyen Life and YuantaP Shares.
Diversification Opportunities for Lungyen Life and YuantaP Shares
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lungyen and YuantaP is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lungyen Life Service and YuantaP shares Taiwan Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Lungyen Life 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 Lungyen Life Service are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of Lungyen Life i.e., Lungyen Life and YuantaP Shares go up and down completely randomly.
Pair Corralation between Lungyen Life and YuantaP Shares
Assuming the 90 days trading horizon Lungyen Life Service is expected to under-perform the YuantaP Shares. In addition to that, Lungyen Life is 1.23 times more volatile than YuantaP shares Taiwan Electronics. It trades about -0.17 of its total potential returns per unit of risk. YuantaP shares Taiwan Electronics is currently generating about 0.07 per unit of volatility. If you would invest 10,355 in YuantaP shares Taiwan Electronics on October 15, 2024 and sell it today you would earn a total of 155.00 from holding YuantaP shares Taiwan Electronics or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lungyen Life Service vs. YuantaP shares Taiwan Electron
Performance |
| Timeline |
| Lungyen Life Service |
| YuantaP shares Taiwan |
Lungyen Life and YuantaP Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lungyen Life and YuantaP Shares
The main advantage of trading using opposite Lungyen Life and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lungyen Life position performs unexpectedly, YuantaP Shares 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 YuantaP Shares will offset losses from the drop in YuantaP Shares' long position.| Lungyen Life vs. Da Lue International | Lungyen Life vs. Foxconn Technology Co | Lungyen Life vs. Fubon Financial Holding | Lungyen Life vs. YuantaP shares Taiwan Top |
| YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. YuantaP shares MSCI Taiwan | YuantaP Shares vs. YuantaP shares Taiwan GreTai | YuantaP Shares vs. YuantaP shares SSE50 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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