Correlation Between Yeou Yih and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Yeou Yih and Chi Hua 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 Yeou Yih and Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yeou Yih Steel and Chi Hua Fitness, you can compare the effects of market volatilities on Yeou Yih and Chi Hua 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 Yeou Yih with a short position of Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yeou Yih and Chi Hua.
Diversification Opportunities for Yeou Yih and Chi Hua
Poor diversification
The 3 months correlation between Yeou and Chi is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Yeou Yih Steel and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness and Yeou Yih 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 Yeou Yih Steel are associated (or correlated) with Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Yeou Yih i.e., Yeou Yih and Chi Hua go up and down completely randomly.
Pair Corralation between Yeou Yih and Chi Hua
Assuming the 90 days trading horizon Yeou Yih Steel is expected to under-perform the Chi Hua. In addition to that, Yeou Yih is 1.16 times more volatile than Chi Hua Fitness. It trades about -0.5 of its total potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.32 per unit of volatility. If you would invest 3,785 in Chi Hua Fitness on October 13, 2024 and sell it today you would lose (205.00) from holding Chi Hua Fitness or give up 5.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Yeou Yih Steel vs. Chi Hua Fitness
Performance |
| Timeline |
| Yeou Yih Steel |
| Chi Hua Fitness |
Yeou Yih and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yeou Yih and Chi Hua
The main advantage of trading using opposite Yeou Yih and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yeou Yih position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.| Yeou Yih vs. EnTie Commercial Bank | Yeou Yih vs. Connection Technology Systems | Yeou Yih vs. Mega Financial Holding | Yeou Yih vs. Central Reinsurance Corp |
| Chi Hua vs. Formosa Chemicals Fibre | Chi Hua vs. Gamania Digital Entertainment | Chi Hua vs. Transcend Information | Chi Hua vs. Evergreen International Storage |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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