Correlation Between Yuanta SP and Yuanta Global

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

By analyzing existing cross correlation between Yuanta SP GSCI and Yuanta Global NexGen, you can compare the effects of market volatilities on Yuanta SP and Yuanta Global 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 SP with a short position of Yuanta Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta SP and Yuanta Global.

Diversification Opportunities for Yuanta SP and Yuanta Global

0.39

Correlation Coefficient

Yuanta SP  Yuanta Global

Weak diversification

The 3 months correlation between Yuanta and Yuanta is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta SP GSCI and Yuanta Global NexGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Global NexGen and Yuanta SP 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 SP GSCI are associated (or correlated) with Yuanta Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Global NexGen has no effect on the direction of Yuanta SP i.e., Yuanta SP and Yuanta Global go up and down completely randomly.

Pair Corralation between Yuanta SP and Yuanta Global

Assuming the 90 days trading horizon Yuanta SP GSCI is expected to generate 0.89 times more return on investment than Yuanta Global. However, Yuanta SP GSCI is 1.12 times less risky than Yuanta Global. It trades about 0.06 of its potential returns per unit of risk. Yuanta Global NexGen is currently generating about 0.05 per unit of risk. If you would invest  3,002  in Yuanta SP GSCI on September 14, 2024 and sell it today you would earn a total of  112.00  from holding Yuanta SP GSCI or generate 3.73% return on investment over 90 days.

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

Yuanta SP GSCI  vs.  Yuanta Global NexGen

Yuanta SP GSCI

Risk-Adjusted Performance

5 of 100

Modest

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

Yuanta Global NexGen

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Global NexGen are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Yuanta Global is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Yuanta SP and Yuanta Global

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

The idea behind Yuanta SP GSCI and Yuanta Global NexGen 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.