Correlation Between YuantaP Shares and China Ecotek

Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and China Ecotek 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 China Ecotek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YuantaP shares Taiwan Electronics and China Ecotek Corp, you can compare the effects of market volatilities on YuantaP Shares and China Ecotek 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 China Ecotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and China Ecotek.

Diversification Opportunities for YuantaP Shares and China Ecotek

0.63

Correlation Coefficient

YuantaP Shares  China Ecotek

Poor diversification

The 3 months correlation between YuantaP and China is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and China Ecotek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Ecotek 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 Electronics are associated (or correlated) with China Ecotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Ecotek Corp has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and China Ecotek go up and down completely randomly.

Pair Corralation between YuantaP Shares and China Ecotek

Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to generate 1.36 times more return on investment than China Ecotek. However, YuantaP Shares is 1.36 times more volatile than China Ecotek Corp. It trades about 0.09 of its potential returns per unit of risk. China Ecotek Corp is currently generating about 0.03 per unit of risk. If you would invest  9,640  in YuantaP shares Taiwan Electronics on September 16, 2024 and sell it today you would earn a total of  700.00  from holding YuantaP shares Taiwan Electronics or generate 7.26% return on investment over 90 days.

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

YuantaP shares Taiwan Electron  vs.  China Ecotek Corp

YuantaP shares Taiwan

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Electronics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, YuantaP Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

China Ecotek Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Ecotek Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, China Ecotek 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 China Ecotek

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

The idea behind YuantaP shares Taiwan Electronics and China Ecotek 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.

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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.