Correlation Between YuantaP Shares and Gourmet Master

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

Diversification Opportunities for YuantaP Shares and Gourmet Master

0.52

Correlation Coefficient

YuantaP Shares  Gourmet Master

Very weak diversification

The 3 months correlation between YuantaP and Gourmet is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Gourmet Master Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gourmet Master 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 Gourmet Master. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gourmet Master has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Gourmet Master go up and down completely randomly.

Pair Corralation between YuantaP Shares and Gourmet Master

Assuming the 90 days trading horizon YuantaP Shares is expected to generate 2.72 times less return on investment than Gourmet Master. But when comparing it to its historical volatility, YuantaP shares Taiwan Electronics is 1.3 times less risky than Gourmet Master. It trades about 0.09 of its potential returns per unit of risk. Gourmet Master Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,210  in Gourmet Master Co on September 13, 2024 and sell it today you would earn a total of  1,560  from holding Gourmet Master Co or generate 19.0% 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 Electron  vs.  Gourmet Master Co

YuantaP shares Taiwan

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Electronics are ranked lower than 6 (%) 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.

Gourmet Master

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gourmet Master Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gourmet Master showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YuantaP Shares and Gourmet Master

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

The idea behind YuantaP shares Taiwan Electronics and Gourmet Master Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.