Correlation Between YuantaP Shares and Baotek Industrial

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

Diversification Opportunities for YuantaP Shares and Baotek Industrial

-0.33

Correlation Coefficient

YuantaP Shares  Baotek Industrial

Very good diversification

The 3 months correlation between YuantaP and Baotek is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Baotek Industrial Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baotek Industrial 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 Baotek Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baotek Industrial has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Baotek Industrial go up and down completely randomly.

Pair Corralation between YuantaP Shares and Baotek Industrial

Assuming the 90 days trading horizon YuantaP Shares is expected to generate 1.63 times less return on investment than Baotek Industrial. But when comparing it to its historical volatility, YuantaP shares Taiwan Electronics is 2.68 times less risky than Baotek Industrial. It trades about 0.16 of its potential returns per unit of risk. Baotek Industrial Materials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,960  in Baotek Industrial Materials on September 17, 2024 and sell it today you would earn a total of  215.00  from holding Baotek Industrial Materials or generate 5.43% return on investment over 90 days.

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

YuantaP shares Taiwan Electron  vs.  Baotek Industrial Materials

YuantaP shares Taiwan

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Electronics are ranked lower than 9 (%) 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.

Baotek Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind YuantaP shares Taiwan Electronics and Baotek Industrial Materials 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 Transaction History module to view history of all your transactions and understand their impact on performance.