Correlation Between Choice Development and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both Choice Development 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 Choice Development and YuantaP Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choice Development and YuantaP shares Taiwan Mid Cap, you can compare the effects of market volatilities on Choice Development 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 Choice Development with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Development and YuantaP Shares.
Diversification Opportunities for Choice Development and YuantaP Shares
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Choice and YuantaP is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Choice Development and YuantaP shares Taiwan Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Choice Development 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 Choice Development 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 Choice Development i.e., Choice Development and YuantaP Shares go up and down completely randomly.
Pair Corralation between Choice Development and YuantaP Shares
Assuming the 90 days trading horizon Choice Development is expected to generate 1.92 times more return on investment than YuantaP Shares. However, Choice Development is 1.92 times more volatile than YuantaP shares Taiwan Mid Cap. It trades about 0.04 of its potential returns per unit of risk. YuantaP shares Taiwan Mid Cap is currently generating about -0.16 per unit of risk. If you would invest 1,560 in Choice Development on August 26, 2024 and sell it today you would earn a total of 25.00 from holding Choice Development or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Development vs. YuantaP shares Taiwan Mid Cap
Performance |
| Timeline |
| Choice Development |
| YuantaP shares Taiwan |
Choice Development and YuantaP Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Development and YuantaP Shares
The main advantage of trading using opposite Choice Development and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Development 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.| Choice Development vs. Sunny Friend Environmental | Choice Development vs. TTET Union Corp | Choice Development vs. ECOVE Environment Corp | Choice Development vs. Yulon Finance Corp |
| YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Yuanta Daily CSI | YuantaP Shares vs. Fuh Hwa Emerging |
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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