Correlation Between Yeou Yih and Taiwan Steel
Can any of the company-specific risk be diversified away by investing in both Yeou Yih and Taiwan Steel 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 Taiwan Steel 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 Taiwan Steel Union, you can compare the effects of market volatilities on Yeou Yih and Taiwan Steel 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 Taiwan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yeou Yih and Taiwan Steel.
Diversification Opportunities for Yeou Yih and Taiwan Steel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yeou and Taiwan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Yeou Yih Steel and Taiwan Steel Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Steel Union 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 Taiwan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Steel Union has no effect on the direction of Yeou Yih i.e., Yeou Yih and Taiwan Steel go up and down completely randomly.
Pair Corralation between Yeou Yih and Taiwan Steel
Assuming the 90 days trading horizon Yeou Yih Steel is expected to under-perform the Taiwan Steel. But the stock apears to be less risky and, when comparing its historical volatility, Yeou Yih Steel is 1.36 times less risky than Taiwan Steel. The stock trades about -0.39 of its potential returns per unit of risk. The Taiwan Steel Union is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 11,200 in Taiwan Steel Union on October 21, 2024 and sell it today you would lose (550.00) from holding Taiwan Steel Union or give up 4.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yeou Yih Steel vs. Taiwan Steel Union
Performance |
| Timeline |
| Yeou Yih Steel |
| Taiwan Steel Union |
Yeou Yih and Taiwan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yeou Yih and Taiwan Steel
The main advantage of trading using opposite Yeou Yih and Taiwan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yeou Yih position performs unexpectedly, Taiwan Steel 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 Steel will offset losses from the drop in Taiwan Steel's long position.| Yeou Yih vs. Fu Burg Industrial | Yeou Yih vs. Tsang Yow Industrial | Yeou Yih vs. Onyx Healthcare | Yeou Yih vs. MedFirst Healthcare Services |
| Taiwan Steel vs. Cleanaway Co | Taiwan Steel vs. Sunny Friend Environmental | Taiwan Steel vs. Topco Scientific Co | Taiwan Steel vs. Kung Long Batteries |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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