Correlation Between YuantaP Shares and Arbor Technology

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

Diversification Opportunities for YuantaP Shares and Arbor Technology

0.85

Correlation Coefficient

YuantaP Shares  Arbor Technology

Very poor diversification

The 3 months correlation between YuantaP and Arbor is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor 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 Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Arbor Technology go up and down completely randomly.

Pair Corralation between YuantaP Shares and Arbor Technology

Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to under-perform the Arbor Technology. But the etf apears to be less risky and, when comparing its historical volatility, YuantaP shares Taiwan Mid Cap is 3.4 times less risky than Arbor Technology. The etf trades about -0.06 of its potential returns per unit of risk. The Arbor Technology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,090  in Arbor Technology on December 30, 2024 and sell it today you would lose (90.00) from holding Arbor Technology or give up 1.77% of portfolio value over 90 days.

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

YuantaP shares Taiwan Mid Cap  vs.  Arbor Technology

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.

Arbor Technology

Risk-Adjusted Performance

Very Weak

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

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

The idea behind YuantaP shares Taiwan Mid Cap and Arbor 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.