Correlation Between YuantaP Shares and Cathay SP

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

By analyzing existing cross correlation between YuantaP shares Taiwan Mid Cap and Cathay SP North, you can compare the effects of market volatilities on YuantaP Shares and Cathay SP 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 Cathay SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Cathay SP.

Diversification Opportunities for YuantaP Shares and Cathay SP

-0.62

Correlation Coefficient

YuantaP Shares  Cathay SP

Excellent diversification

The 3 months correlation between YuantaP and Cathay is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Cathay SP North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay SP North 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 Mid Cap are associated (or correlated) with Cathay SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay SP North has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Cathay SP go up and down completely randomly.

Pair Corralation between YuantaP Shares and Cathay SP

Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to under-perform the Cathay SP. But the etf apears to be less risky and, when comparing its historical volatility, YuantaP shares Taiwan Mid Cap is 1.67 times less risky than Cathay SP. The etf trades about -0.13 of its potential returns per unit of risk. The Cathay SP North is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  4,815  in Cathay SP North on October 20, 2024 and sell it today you would lose (13.00) from holding Cathay SP North or give up 0.27% of portfolio value over 90 days.

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

YuantaP shares Taiwan Mid Cap  vs.  Cathay SP North

YuantaP shares Taiwan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YuantaP shares Taiwan Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Cathay SP North

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with YuantaP Shares and Cathay SP

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

The idea behind YuantaP shares Taiwan Mid Cap and Cathay SP North 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.