Correlation Between YuantaP Shares and Roo Hsing

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

Diversification Opportunities for YuantaP Shares and Roo Hsing

-0.33

Correlation Coefficient

YuantaP Shares  Roo Hsing

Very good diversification

The 3 months correlation between YuantaP and Roo is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Roo Hsing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roo Hsing 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 Roo Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roo Hsing has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Roo Hsing go up and down completely randomly.

Pair Corralation between YuantaP Shares and Roo Hsing

Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 0.76 times more return on investment than Roo Hsing. However, YuantaP shares Taiwan Top is 1.32 times less risky than Roo Hsing. It trades about 0.03 of its potential returns per unit of risk. Roo Hsing Co is currently generating about 0.01 per unit of risk. If you would invest  18,764  in YuantaP shares Taiwan Top on September 19, 2024 and sell it today you would earn a total of  946.00  from holding YuantaP shares Taiwan Top or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.28%
Values	Daily Returns

YuantaP shares Taiwan Top  vs.  Roo Hsing Co

YuantaP shares Taiwan

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Top are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, YuantaP Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Roo Hsing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roo Hsing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Roo Hsing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with YuantaP Shares and Roo Hsing

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

The idea behind YuantaP shares Taiwan Top and Roo Hsing Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.