Correlation Between YuantaP Shares and Shenmao Technology

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

Diversification Opportunities for YuantaP Shares and Shenmao Technology

0.9

Correlation Coefficient

YuantaP Shares  Shenmao Technology

Almost no diversification

The 3 months correlation between YuantaP and Shenmao is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Shenmao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenmao Technology 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 Shenmao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenmao Technology has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Shenmao Technology go up and down completely randomly.

Pair Corralation between YuantaP Shares and Shenmao Technology

Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to under-perform the Shenmao Technology. But the etf apears to be less risky and, when comparing its historical volatility, YuantaP shares Taiwan Mid Cap is 2.41 times less risky than Shenmao Technology. The etf trades about -0.02 of its potential returns per unit of risk. The Shenmao Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,420  in Shenmao Technology on October 26, 2024 and sell it today you would earn a total of  170.00  from holding Shenmao Technology or generate 2.65% return on investment over 90 days.

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

YuantaP shares Taiwan Mid Cap  vs.  Shenmao Technology

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 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.

Shenmao Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind YuantaP shares Taiwan Mid Cap and Shenmao Technology 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.