Correlation Between YuantaP Shares and Ma Kuang

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

Diversification Opportunities for YuantaP Shares and Ma Kuang

0.44

Correlation Coefficient

YuantaP Shares  Ma Kuang

Very weak diversification

The 3 months correlation between YuantaP and 4139 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare 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 Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Ma Kuang go up and down completely randomly.

Pair Corralation between YuantaP Shares and Ma Kuang

Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to generate 1.01 times more return on investment than Ma Kuang. However, YuantaP Shares is 1.01 times more volatile than Ma Kuang Healthcare. It trades about 0.02 of its potential returns per unit of risk. Ma Kuang Healthcare is currently generating about -0.1 per unit of risk. If you would invest  7,680  in YuantaP shares Taiwan Mid Cap on September 19, 2024 and sell it today you would earn a total of  30.00  from holding YuantaP shares Taiwan Mid Cap or generate 0.39% return on investment over 90 days.

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

YuantaP shares Taiwan Mid Cap  vs.  Ma Kuang Healthcare

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.

Ma Kuang Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind YuantaP shares Taiwan Mid Cap and Ma Kuang Healthcare 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.