Correlation Between Yuanta SP and YuantaP Shares

Can any of the company-specific risk be diversified away by investing in both Yuanta SP and YuantaP Shares 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 YuantaP Shares 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 YuantaP shares Taiwan Top, you can compare the effects of market volatilities on Yuanta SP and YuantaP Shares 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 YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta SP and YuantaP Shares.

Diversification Opportunities for Yuanta SP and YuantaP Shares

0.53

Correlation Coefficient

Yuanta SP  YuantaP Shares

Very weak diversification

The 3 months correlation between Yuanta and YuantaP is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta SP GSCI and YuantaP shares Taiwan Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan 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 YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of Yuanta SP i.e., Yuanta SP and YuantaP Shares go up and down completely randomly.

Pair Corralation between Yuanta SP and YuantaP Shares

Assuming the 90 days trading horizon Yuanta SP GSCI is expected to generate 1.24 times more return on investment than YuantaP Shares. However, Yuanta SP is 1.24 times more volatile than YuantaP shares Taiwan Top. It trades about 0.0 of its potential returns per unit of risk. YuantaP shares Taiwan Top is currently generating about -0.04 per unit of risk. If you would invest  1,658  in Yuanta SP GSCI on December 4, 2024 and sell it today you would lose (11.00) from holding Yuanta SP GSCI or give up 0.66% of portfolio value over 90 days.

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

Yuanta SP GSCI  vs.  YuantaP shares Taiwan Top

Yuanta SP GSCI

Risk-Adjusted Performance

Weak

Over the last 90 days Yuanta SP GSCI has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

YuantaP shares Taiwan

Risk-Adjusted Performance

Very Weak

Over the last 90 days YuantaP shares Taiwan Top has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, YuantaP Shares is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Yuanta SP and YuantaP Shares

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

The idea behind Yuanta SP GSCI and YuantaP shares Taiwan Top 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.