Correlation Between Yulon Finance and Taiwan Glass
Can any of the company-specific risk be diversified away by investing in both Yulon Finance and Taiwan Glass 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 Yulon Finance and Taiwan Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Finance Corp and Taiwan Glass Ind, you can compare the effects of market volatilities on Yulon Finance and Taiwan Glass 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 Yulon Finance with a short position of Taiwan Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Finance and Taiwan Glass.
Diversification Opportunities for Yulon Finance and Taiwan Glass
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yulon and Taiwan is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Finance Corp and Taiwan Glass Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Glass Ind and Yulon Finance 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 Yulon Finance Corp are associated (or correlated) with Taiwan Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Glass Ind has no effect on the direction of Yulon Finance i.e., Yulon Finance and Taiwan Glass go up and down completely randomly.
Pair Corralation between Yulon Finance and Taiwan Glass
Assuming the 90 days trading horizon Yulon Finance Corp is expected to under-perform the Taiwan Glass. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Finance Corp is 1.32 times less risky than Taiwan Glass. The stock trades about -0.03 of its potential returns per unit of risk. The Taiwan Glass Ind is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,460 in Taiwan Glass Ind on August 30, 2024 and sell it today you would lose (465.00) from holding Taiwan Glass Ind or give up 18.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Finance Corp vs. Taiwan Glass Ind
Performance |
| Timeline |
| Yulon Finance Corp |
| Taiwan Glass Ind |
Yulon Finance and Taiwan Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Finance and Taiwan Glass
The main advantage of trading using opposite Yulon Finance and Taiwan Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Finance position performs unexpectedly, Taiwan Glass 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 Taiwan Glass will offset losses from the drop in Taiwan Glass' long position.| Yulon Finance vs. Taiwan Secom Co | Yulon Finance vs. TTET Union Corp | Yulon Finance vs. China Steel Chemical | Yulon Finance vs. Taiwan Shin Kong |
| Taiwan Glass vs. Yulon Motor Co | Taiwan Glass vs. Far Eastern Department | Taiwan Glass vs. China Steel Corp | Taiwan Glass vs. Chang Hwa Commercial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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