Correlation Between Taiwan Weighted and Yuanta Securities
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Yuanta Securities 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 Securities 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 Securities Investment, you can compare the effects of market volatilities on Taiwan Weighted and Yuanta Securities 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 Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Yuanta Securities.
Diversification Opportunities for Taiwan Weighted and Yuanta Securities
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and Yuanta is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Yuanta Securities Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Securities 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 Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Securities has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Yuanta Securities go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Yuanta Securities
Assuming the 90 days trading horizon Taiwan Weighted is expected to under-perform the Yuanta Securities. But the index apears to be less risky and, when comparing its historical volatility, Taiwan Weighted is 1.23 times less risky than Yuanta Securities. The index trades about -0.07 of its potential returns per unit of risk. The Yuanta Securities Investment is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 922.00 in Yuanta Securities Investment on August 27, 2024 and sell it today you would earn a total of 26.00 from holding Yuanta Securities Investment or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Taiwan Weighted vs. Yuanta Securities Investment
Performance |
| Timeline |
Taiwan Weighted and Yuanta Securities Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Yuanta Securities Investment
Pair trading matchups for Yuanta Securities
Pair Trading with Taiwan Weighted and Yuanta Securities
The main advantage of trading using opposite Taiwan Weighted and Yuanta Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Yuanta Securities 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 Securities will offset losses from the drop in Yuanta Securities' long position.| Taiwan Weighted vs. Taichung Commercial Bank | Taiwan Weighted vs. China Times Publishing | Taiwan Weighted vs. First Insurance Co | Taiwan Weighted vs. Mega Financial Holding |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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