Correlation Between Yieh United and Taiwan Cooperative
Can any of the company-specific risk be diversified away by investing in both Yieh United and Taiwan Cooperative 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 Yieh United and Taiwan Cooperative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yieh United Steel and Taiwan Cooperative Financial, you can compare the effects of market volatilities on Yieh United and Taiwan Cooperative 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 Yieh United with a short position of Taiwan Cooperative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yieh United and Taiwan Cooperative.
Diversification Opportunities for Yieh United and Taiwan Cooperative
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yieh and Taiwan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Yieh United Steel and Taiwan Cooperative Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cooperative and Yieh United 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 Yieh United Steel are associated (or correlated) with Taiwan Cooperative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cooperative has no effect on the direction of Yieh United i.e., Yieh United and Taiwan Cooperative go up and down completely randomly.
Pair Corralation between Yieh United and Taiwan Cooperative
Assuming the 90 days trading horizon Yieh United Steel is expected to generate 1.69 times more return on investment than Taiwan Cooperative. However, Yieh United is 1.69 times more volatile than Taiwan Cooperative Financial. It trades about -0.05 of its potential returns per unit of risk. Taiwan Cooperative Financial is currently generating about -0.11 per unit of risk. If you would invest 650.00 in Yieh United Steel on August 29, 2024 and sell it today you would lose (8.00) from holding Yieh United Steel or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yieh United Steel vs. Taiwan Cooperative Financial
Performance |
| Timeline |
| Yieh United Steel |
| Taiwan Cooperative |
Yieh United and Taiwan Cooperative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yieh United and Taiwan Cooperative
The main advantage of trading using opposite Yieh United and Taiwan Cooperative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yieh United position performs unexpectedly, Taiwan Cooperative 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 Cooperative will offset losses from the drop in Taiwan Cooperative's long position.The idea behind Yieh United Steel and Taiwan Cooperative Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Taiwan Cooperative vs. Taiwan Secom Co | Taiwan Cooperative vs. TTET Union Corp | Taiwan Cooperative vs. China Steel Chemical | Taiwan Cooperative vs. Taiwan Shin Kong |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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