Correlation Between YuantaP Shares and Kuo Toong

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

Diversification Opportunities for YuantaP Shares and Kuo Toong

0.91

Correlation Coefficient

YuantaP Shares  Kuo Toong

Almost no diversification

The 3 months correlation between YuantaP and Kuo is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Kuo Toong International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuo Toong International 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 Kuo Toong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuo Toong International has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Kuo Toong go up and down completely randomly.

Pair Corralation between YuantaP Shares and Kuo Toong

Assuming the 90 days trading horizon YuantaP Shares is expected to generate 2.45 times less return on investment than Kuo Toong. But when comparing it to its historical volatility, YuantaP shares Taiwan Mid Cap is 2.73 times less risky than Kuo Toong. It trades about 0.08 of its potential returns per unit of risk. Kuo Toong International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,160  in Kuo Toong International on October 4, 2024 and sell it today you would earn a total of  2,660  from holding Kuo Toong International or generate 123.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.79%
Values	Daily Returns

YuantaP shares Taiwan Mid Cap  vs.  Kuo Toong International

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.

Kuo Toong International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kuo Toong International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with YuantaP Shares and Kuo Toong

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

The idea behind YuantaP shares Taiwan Mid Cap and Kuo Toong International 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.