Correlation Between YuantaP Shares and Yuanta Daily

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

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

Diversification Opportunities for YuantaP Shares and Yuanta Daily

0.37

Correlation Coefficient

YuantaP Shares  Yuanta Daily

Weak diversification

The 3 months correlation between YuantaP and Yuanta is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares MSCI Taiwan and Yuanta Daily Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily Taiwan 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 MSCI Taiwan are associated (or correlated) with Yuanta Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Daily Taiwan has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Yuanta Daily go up and down completely randomly.

Pair Corralation between YuantaP Shares and Yuanta Daily

Assuming the 90 days trading horizon YuantaP Shares is expected to generate 173.65 times less return on investment than Yuanta Daily. But when comparing it to its historical volatility, YuantaP shares MSCI Taiwan is 120.58 times less risky than Yuanta Daily. It trades about 0.15 of its potential returns per unit of risk. Yuanta Daily Taiwan is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  333.00  in Yuanta Daily Taiwan on September 27, 2024 and sell it today you would earn a total of  1,934  from holding Yuanta Daily Taiwan or generate 580.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

YuantaP shares MSCI Taiwan  vs.  Yuanta Daily Taiwan

YuantaP shares MSCI

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares MSCI Taiwan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, YuantaP Shares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Yuanta Daily Taiwan

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Daily Taiwan are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Yuanta Daily sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YuantaP Shares and Yuanta Daily

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

The idea behind YuantaP shares MSCI Taiwan and Yuanta Daily Taiwan 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.