Correlation Between YuantaP Shares and Taiwan Sanyo

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

Diversification Opportunities for YuantaP Shares and Taiwan Sanyo

0.74

Correlation Coefficient

YuantaP Shares  Taiwan Sanyo

Poor diversification

The 3 months correlation between YuantaP and Taiwan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Taiwan Sanyo Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sanyo Electric 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 Taiwan Sanyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sanyo Electric has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Taiwan Sanyo go up and down completely randomly.

Pair Corralation between YuantaP Shares and Taiwan Sanyo

Assuming the 90 days trading horizon YuantaP Shares is expected to generate 1.02 times less return on investment than Taiwan Sanyo. In addition to that, YuantaP Shares is 1.08 times more volatile than Taiwan Sanyo Electric. It trades about 0.25 of its total potential returns per unit of risk. Taiwan Sanyo Electric is currently generating about 0.28 per unit of volatility. If you would invest  3,820  in Taiwan Sanyo Electric on December 4, 2024 and sell it today you would earn a total of  145.00  from holding Taiwan Sanyo Electric or generate 3.8% return on investment over 90 days.

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

YuantaP shares Taiwan Mid Cap  vs.  Taiwan Sanyo Electric

YuantaP shares Taiwan

Risk-Adjusted Performance

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 fairly stable basic indicators, YuantaP Shares is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Taiwan Sanyo Electric

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Sanyo Electric are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taiwan Sanyo 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 Taiwan Sanyo

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

The idea behind YuantaP shares Taiwan Mid Cap and Taiwan Sanyo Electric 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.