Correlation Between YuantaP Shares and Fubon SSE180

Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Fubon SSE180 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 YuantaP Shares and Fubon SSE180 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YuantaP shares Taiwan Top and Fubon SSE180 Exchange, you can compare the effects of market volatilities on YuantaP Shares and Fubon SSE180 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 YuantaP Shares with a short position of Fubon SSE180. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Fubon SSE180.

Diversification Opportunities for YuantaP Shares and Fubon SSE180

0.03

Correlation Coefficient

YuantaP Shares  Fubon SSE180

Significant diversification

The 3 months correlation between YuantaP and Fubon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Fubon SSE180 Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon SSE180 Exchange and YuantaP Shares 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 YuantaP shares Taiwan Top are associated (or correlated) with Fubon SSE180. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon SSE180 Exchange has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Fubon SSE180 go up and down completely randomly.

Pair Corralation between YuantaP Shares and Fubon SSE180

Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 1.25 times more return on investment than Fubon SSE180. However, YuantaP Shares is 1.25 times more volatile than Fubon SSE180 Exchange. It trades about 0.1 of its potential returns per unit of risk. Fubon SSE180 Exchange is currently generating about 0.01 per unit of risk. If you would invest  11,073  in YuantaP shares Taiwan Top on October 7, 2024 and sell it today you would earn a total of  8,527  from holding YuantaP shares Taiwan Top or generate 77.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.96%
Values	Daily Returns

YuantaP shares Taiwan Top  vs.  Fubon SSE180 Exchange

YuantaP shares Taiwan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Top are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, YuantaP Shares is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fubon SSE180 Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fubon SSE180 Exchange has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fubon SSE180 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with YuantaP Shares and Fubon SSE180

The main advantage of trading using opposite YuantaP Shares and Fubon SSE180 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Fubon SSE180 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 Fubon SSE180 will offset losses from the drop in Fubon SSE180's long position.

The idea behind YuantaP shares Taiwan Top and Fubon SSE180 Exchange pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.