Correlation Between Yuanta Daily and CTBC Treasury

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

By analyzing existing cross correlation between Yuanta Daily Taiwan and CTBC Treasury 20, you can compare the effects of market volatilities on Yuanta Daily and CTBC Treasury 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 Yuanta Daily with a short position of CTBC Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta Daily and CTBC Treasury.

Diversification Opportunities for Yuanta Daily and CTBC Treasury

0.59

Correlation Coefficient

Yuanta Daily  CTBC Treasury

Very weak diversification

The 3 months correlation between Yuanta and CTBC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Daily Taiwan and CTBC Treasury 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC Treasury 20 and Yuanta Daily 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 Yuanta Daily Taiwan are associated (or correlated) with CTBC Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC Treasury 20 has no effect on the direction of Yuanta Daily i.e., Yuanta Daily and CTBC Treasury go up and down completely randomly.

Pair Corralation between Yuanta Daily and CTBC Treasury

Assuming the 90 days trading horizon Yuanta Daily is expected to generate 1.23 times less return on investment than CTBC Treasury. In addition to that, Yuanta Daily is 1.48 times more volatile than CTBC Treasury 20. It trades about 0.07 of its total potential returns per unit of risk. CTBC Treasury 20 is currently generating about 0.13 per unit of volatility. If you would invest  2,846  in CTBC Treasury 20 on December 24, 2024 and sell it today you would earn a total of  158.00  from holding CTBC Treasury 20 or generate 5.55% return on investment over 90 days.

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

Yuanta Daily Taiwan  vs.  CTBC Treasury 20

Yuanta Daily Taiwan

Risk-Adjusted Performance

Modest

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

CTBC Treasury 20

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTBC Treasury 20 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CTBC Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yuanta Daily and CTBC Treasury

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

The idea behind Yuanta Daily Taiwan and CTBC Treasury 20 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.