Correlation Between YuantaP Shares and TMP Steel

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

Diversification Opportunities for YuantaP Shares and TMP Steel

-0.41

Correlation Coefficient

YuantaP Shares  TMP Steel

Very good diversification

The 3 months correlation between YuantaP and TMP is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and TMP Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMP Steel 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 TMP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMP Steel has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and TMP Steel go up and down completely randomly.

Pair Corralation between YuantaP Shares and TMP Steel

Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to generate 0.99 times more return on investment than TMP Steel. However, YuantaP shares Taiwan Electronics is 1.01 times less risky than TMP Steel. It trades about 0.11 of its potential returns per unit of risk. TMP Steel is currently generating about -0.09 per unit of risk. If you would invest  9,240  in YuantaP shares Taiwan Electronics on September 4, 2024 and sell it today you would earn a total of  875.00  from holding YuantaP shares Taiwan Electronics or generate 9.47% return on investment over 90 days.

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

YuantaP shares Taiwan Electron  vs.  TMP Steel

YuantaP shares Taiwan

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Electronics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, YuantaP Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TMP Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMP Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with YuantaP Shares and TMP Steel

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

The idea behind YuantaP shares Taiwan Electronics and TMP Steel 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.