Correlation Between YuantaP Shares and Paradigm

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

Diversification Opportunities for YuantaP Shares and Paradigm

-0.07

Correlation Coefficient

YuantaP Shares  Paradigm

Good diversification

The 3 months correlation between YuantaP and Paradigm is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Paradigm SP GSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm SP GSCI 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 Paradigm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm SP GSCI has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Paradigm go up and down completely randomly.

Pair Corralation between YuantaP Shares and Paradigm

Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 0.6 times more return on investment than Paradigm. However, YuantaP shares Taiwan Top is 1.66 times less risky than Paradigm. It trades about 0.2 of its potential returns per unit of risk. Paradigm SP GSCI is currently generating about 0.06 per unit of risk. If you would invest  18,985  in YuantaP shares Taiwan Top on September 27, 2024 and sell it today you would earn a total of  855.00  from holding YuantaP shares Taiwan Top or generate 4.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

YuantaP shares Taiwan Top  vs.  Paradigm SP GSCI

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.

Paradigm SP GSCI

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paradigm SP GSCI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Paradigm may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with YuantaP Shares and Paradigm

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

The idea behind YuantaP shares Taiwan Top and Paradigm SP GSCI 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.