Correlation Between Yuanta Daily and CTBC Enhanced

Can any of the company-specific risk be diversified away by investing in both Yuanta Daily and CTBC Enhanced 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 Enhanced 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 CTBC Enhanced Yield, you can compare the effects of market volatilities on Yuanta Daily and CTBC Enhanced 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 Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta Daily and CTBC Enhanced.

Diversification Opportunities for Yuanta Daily and CTBC Enhanced

-0.1

Correlation Coefficient

Yuanta Daily  CTBC Enhanced

Good diversification

The 3 months correlation between Yuanta and CTBC is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Daily CSI and CTBC Enhanced Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC Enhanced Yield 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 CTBC Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC Enhanced Yield has no effect on the direction of Yuanta Daily i.e., Yuanta Daily and CTBC Enhanced go up and down completely randomly.

Pair Corralation between Yuanta Daily and CTBC Enhanced

Assuming the 90 days trading horizon Yuanta Daily CSI is expected to generate 6.34 times more return on investment than CTBC Enhanced. However, Yuanta Daily is 6.34 times more volatile than CTBC Enhanced Yield. It trades about 0.02 of its potential returns per unit of risk. CTBC Enhanced Yield is currently generating about 0.02 per unit of risk. If you would invest  1,455  in Yuanta Daily CSI on October 9, 2024 and sell it today you would earn a total of  65.00  from holding Yuanta Daily CSI or generate 4.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.31%
Values	Daily Returns

Yuanta Daily CSI  vs.  CTBC Enhanced Yield

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 weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

CTBC Enhanced Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTBC Enhanced Yield has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CTBC Enhanced is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yuanta Daily and CTBC Enhanced

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

The idea behind Yuanta Daily CSI and CTBC Enhanced Yield 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.