Correlation Between YuantaP Shares and Power Wind

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

Diversification Opportunities for YuantaP Shares and Power Wind

0.04

Correlation Coefficient

YuantaP Shares  Power Wind

Significant diversification

The 3 months correlation between YuantaP and Power is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Power Wind Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Wind Health 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 Power Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Wind Health has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Power Wind go up and down completely randomly.

Pair Corralation between YuantaP Shares and Power Wind

Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to generate 0.95 times more return on investment than Power Wind. However, YuantaP shares Taiwan Electronics is 1.06 times less risky than Power Wind. It trades about 0.09 of its potential returns per unit of risk. Power Wind Health is currently generating about 0.01 per unit of risk. If you would invest  7,865  in YuantaP shares Taiwan Electronics on October 22, 2024 and sell it today you would earn a total of  2,755  from holding YuantaP shares Taiwan Electronics or generate 35.03% return on investment over 90 days.

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

YuantaP shares Taiwan Electron  vs.  Power Wind Health

YuantaP shares Taiwan

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days YuantaP shares Taiwan Electronics 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Power Wind Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind YuantaP shares Taiwan Electronics and Power Wind Health 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.