Correlation Between Top Union and Yieh United
Can any of the company-specific risk be diversified away by investing in both Top Union and Yieh United 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 Top Union and Yieh United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Union Electronics and Yieh United Steel, you can compare the effects of market volatilities on Top Union and Yieh United 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 Top Union with a short position of Yieh United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Union and Yieh United.
Diversification Opportunities for Top Union and Yieh United
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Top and Yieh is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Top Union Electronics and Yieh United Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yieh United Steel and Top Union 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 Top Union Electronics are associated (or correlated) with Yieh United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yieh United Steel has no effect on the direction of Top Union i.e., Top Union and Yieh United go up and down completely randomly.
Pair Corralation between Top Union and Yieh United
Assuming the 90 days trading horizon Top Union Electronics is expected to generate 1.16 times more return on investment than Yieh United. However, Top Union is 1.16 times more volatile than Yieh United Steel. It trades about 0.18 of its potential returns per unit of risk. Yieh United Steel is currently generating about -0.03 per unit of risk. If you would invest 3,185 in Top Union Electronics on September 1, 2024 and sell it today you would earn a total of 145.00 from holding Top Union Electronics or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Union Electronics vs. Yieh United Steel
Performance |
| Timeline |
| Top Union Electronics |
| Yieh United Steel |
Top Union and Yieh United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Union and Yieh United
The main advantage of trading using opposite Top Union and Yieh United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Union position performs unexpectedly, Yieh United 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 Yieh United will offset losses from the drop in Yieh United's long position.| Top Union vs. Sino American Silicon Products | Top Union vs. Powertech Technology | Top Union vs. Formosa Sumco Technology | Top Union vs. Radiant Opto Electronics Corp |
| Yieh United vs. Basso Industry Corp | Yieh United vs. Chung Hsin Electric Machinery | Yieh United vs. TYC Brother Industrial | Yieh United vs. TECO Electric Machinery |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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