Correlation Between Yieh United and Trade Van
Can any of the company-specific risk be diversified away by investing in both Yieh United and Trade Van 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 Trade Van 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 Trade Van Information Services, you can compare the effects of market volatilities on Yieh United and Trade Van 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 Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yieh United and Trade Van.
Diversification Opportunities for Yieh United and Trade Van
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yieh and Trade is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Yieh United Steel and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Yieh United i.e., Yieh United and Trade Van go up and down completely randomly.
Pair Corralation between Yieh United and Trade Van
Assuming the 90 days trading horizon Yieh United is expected to generate 1.46 times less return on investment than Trade Van. But when comparing it to its historical volatility, Yieh United Steel is 1.04 times less risky than Trade Van. It trades about 0.02 of its potential returns per unit of risk. Trade Van Information Services is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,040 in Trade Van Information Services on September 4, 2024 and sell it today you would earn a total of 40.00 from holding Trade Van Information Services or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yieh United Steel vs. Trade Van Information Services
Performance |
| Timeline |
| Yieh United Steel |
| Trade Van Information |
Yieh United and Trade Van Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yieh United and Trade Van
The main advantage of trading using opposite Yieh United and Trade Van positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yieh United position performs unexpectedly, Trade Van 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 Trade Van will offset losses from the drop in Trade Van's long position.The idea behind Yieh United Steel and Trade Van Information Services 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.| Trade Van vs. Taiwan Semiconductor Manufacturing | Trade Van vs. Yang Ming Marine | Trade Van vs. AU Optronics | Trade Van vs. Nan Ya Plastics |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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