Correlation Between YuantaP Shares and Fubon TWSE

Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Fubon TWSE 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 TWSE 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 TWSE Corporate, you can compare the effects of market volatilities on YuantaP Shares and Fubon TWSE 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 TWSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Fubon TWSE.

Diversification Opportunities for YuantaP Shares and Fubon TWSE

0.99

Correlation Coefficient

YuantaP Shares  Fubon TWSE

No risk reduction

The 3 months correlation between YuantaP and Fubon is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Fubon TWSE Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon TWSE Corporate 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 TWSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon TWSE Corporate has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Fubon TWSE go up and down completely randomly.

Pair Corralation between YuantaP Shares and Fubon TWSE

Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 1.13 times more return on investment than Fubon TWSE. However, YuantaP Shares is 1.13 times more volatile than Fubon TWSE Corporate. It trades about 0.09 of its potential returns per unit of risk. Fubon TWSE Corporate is currently generating about 0.08 per unit of risk. If you would invest  11,063  in YuantaP shares Taiwan Top on December 5, 2024 and sell it today you would earn a total of  7,617  from holding YuantaP shares Taiwan Top or generate 68.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.75%
Values	Daily Returns

YuantaP shares Taiwan Top  vs.  Fubon TWSE Corporate

YuantaP shares Taiwan

Risk-Adjusted Performance

Very Weak

Over the last 90 days YuantaP shares Taiwan Top has generated negative risk-adjusted returns adding no value to investors with long positions. 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 TWSE Corporate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon TWSE Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fubon TWSE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with YuantaP Shares and Fubon TWSE

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

The idea behind YuantaP shares Taiwan Top and Fubon TWSE Corporate 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.