Correlation Between YuantaP Shares and Yulon Finance

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

Diversification Opportunities for YuantaP Shares and Yulon Finance

-0.46

Correlation Coefficient

YuantaP Shares  Yulon Finance

Very good diversification

The 3 months correlation between YuantaP and Yulon is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Yulon Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Finance Corp 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 Yulon Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Finance Corp has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Yulon Finance go up and down completely randomly.

Pair Corralation between YuantaP Shares and Yulon Finance

Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to under-perform the Yulon Finance. In addition to that, YuantaP Shares is 5.31 times more volatile than Yulon Finance Corp. It trades about -0.08 of its total potential returns per unit of risk. Yulon Finance Corp is currently generating about -0.02 per unit of volatility. If you would invest  5,140  in Yulon Finance Corp on October 1, 2024 and sell it today you would lose (10.00) from holding Yulon Finance Corp or give up 0.19% of portfolio value over 90 days.

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

YuantaP shares Taiwan Mid Cap  vs.  Yulon Finance Corp

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yulon Finance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yulon Finance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Yulon Finance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with YuantaP Shares and Yulon Finance

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

The idea behind YuantaP shares Taiwan Mid Cap and Yulon Finance Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.