Correlation Between Yuanta Daily and Fuh Hwa

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

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

Diversification Opportunities for Yuanta Daily and Fuh Hwa

-0.75

Correlation Coefficient

Yuanta Daily  Fuh Hwa

Pay attention - limited upside

The 3 months correlation between Yuanta and Fuh is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Daily CSI and Fuh Hwa Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuh Hwa Daily 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 CSI are associated (or correlated) with Fuh Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuh Hwa Daily has no effect on the direction of Yuanta Daily i.e., Yuanta Daily and Fuh Hwa go up and down completely randomly.

Pair Corralation between Yuanta Daily and Fuh Hwa

Assuming the 90 days trading horizon Yuanta Daily CSI is expected to under-perform the Fuh Hwa. In addition to that, Yuanta Daily is 1.72 times more volatile than Fuh Hwa Daily. It trades about 0.0 of its total potential returns per unit of risk. Fuh Hwa Daily is currently generating about 0.01 per unit of volatility. If you would invest  753.00  in Fuh Hwa Daily on October 10, 2024 and sell it today you would earn a total of  30.00  from holding Fuh Hwa Daily or generate 3.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Yuanta Daily CSI  vs.  Fuh Hwa Daily

Yuanta Daily CSI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yuanta Daily CSI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Fuh Hwa Daily

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fuh Hwa Daily are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fuh Hwa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Yuanta Daily and Fuh Hwa

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

The idea behind Yuanta Daily CSI and Fuh Hwa Daily 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.