Correlation Between YuantaP Shares and Rafael Microelectronics

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

Diversification Opportunities for YuantaP Shares and Rafael Microelectronics

0.61

Correlation Coefficient

YuantaP Shares  Rafael Microelectronics

Poor diversification

The 3 months correlation between YuantaP and Rafael is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Rafael Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Microelectronics 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 Rafael Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Microelectronics has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Rafael Microelectronics go up and down completely randomly.

Pair Corralation between YuantaP Shares and Rafael Microelectronics

Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 0.67 times more return on investment than Rafael Microelectronics. However, YuantaP shares Taiwan Top is 1.5 times less risky than Rafael Microelectronics. It trades about 0.13 of its potential returns per unit of risk. Rafael Microelectronics is currently generating about 0.01 per unit of risk. If you would invest  17,875  in YuantaP shares Taiwan Top on September 15, 2024 and sell it today you would earn a total of  1,655  from holding YuantaP shares Taiwan Top or generate 9.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

YuantaP shares Taiwan Top  vs.  Rafael Microelectronics

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.

Rafael Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rafael Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Rafael Microelectronics 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 Rafael Microelectronics

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

The idea behind YuantaP shares Taiwan Top and Rafael Microelectronics 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.