Correlation Between Taiwan Weighted and Yuanta Daily
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Yuanta Daily 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 Taiwan Weighted and Yuanta Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Yuanta Daily SP, you can compare the effects of market volatilities on Taiwan Weighted and Yuanta Daily 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 Taiwan Weighted with a short position of Yuanta Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Yuanta Daily.
Diversification Opportunities for Taiwan Weighted and Yuanta Daily
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Yuanta is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Yuanta Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily SP and Taiwan Weighted 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 Taiwan Weighted are associated (or correlated) with Yuanta Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Daily SP has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Yuanta Daily go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Yuanta Daily
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.53 times less return on investment than Yuanta Daily. But when comparing it to its historical volatility, Taiwan Weighted is 1.48 times less risky than Yuanta Daily. It trades about 0.09 of its potential returns per unit of risk. Yuanta Daily SP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,290 in Yuanta Daily SP on August 28, 2024 and sell it today you would earn a total of 4,930 from holding Yuanta Daily SP or generate 93.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Taiwan Weighted vs. Yuanta Daily SP
Performance |
| Timeline |
Taiwan Weighted and Yuanta Daily Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Yuanta Daily SP
Pair trading matchups for Yuanta Daily
Pair Trading with Taiwan Weighted and Yuanta Daily
The main advantage of trading using opposite Taiwan Weighted and Yuanta Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Yuanta Daily 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 Yuanta Daily will offset losses from the drop in Yuanta Daily's long position.| Taiwan Weighted vs. Kworld Computer Co | Taiwan Weighted vs. FDC International Hotels | Taiwan Weighted vs. Wonderful Hi Tech Co | Taiwan Weighted vs. Landis Taipei Hotel |
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 CEOs Directory module to screen CEOs from public companies around the world.
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