Correlation Between Taiwan Weighted and Yuanta Global
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Yuanta Global 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 Global 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 Global NexGen, you can compare the effects of market volatilities on Taiwan Weighted and Yuanta Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Yuanta Global.
Diversification Opportunities for Taiwan Weighted and Yuanta Global
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Yuanta is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Yuanta Global NexGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Global NexGen 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Global NexGen has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Yuanta Global go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Yuanta Global
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.84 times more return on investment than Yuanta Global. However, Taiwan Weighted is 1.19 times less risky than Yuanta Global. It trades about 0.1 of its potential returns per unit of risk. Yuanta Global NexGen is currently generating about 0.08 per unit of risk. If you would invest 1,437,334 in Taiwan Weighted on August 28, 2024 and sell it today you would earn a total of 830,542 from holding Taiwan Weighted or generate 57.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.69% |
| Values | Daily Returns |
Taiwan Weighted vs. Yuanta Global NexGen
Performance |
| Timeline |
Taiwan Weighted and Yuanta Global Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Yuanta Global NexGen
Pair trading matchups for Yuanta Global
Pair Trading with Taiwan Weighted and Yuanta Global
The main advantage of trading using opposite Taiwan Weighted and Yuanta Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Yuanta Global 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 Global will offset losses from the drop in Yuanta Global'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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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