Correlation Between Paradigm and YuantaP Shares

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

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

Diversification Opportunities for Paradigm and YuantaP Shares

0.21

Correlation Coefficient

Paradigm  YuantaP Shares

Modest diversification

The 3 months correlation between Paradigm and YuantaP is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Paradigm SP GSCI and YuantaP shares Taiwan Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Paradigm 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 Paradigm 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 Paradigm i.e., Paradigm and YuantaP Shares go up and down completely randomly.

Pair Corralation between Paradigm and YuantaP Shares

Assuming the 90 days trading horizon Paradigm SP GSCI is expected to under-perform the YuantaP Shares. In addition to that, Paradigm is 2.57 times more volatile than YuantaP shares Taiwan Electronics. It trades about -0.02 of its total potential returns per unit of risk. YuantaP shares Taiwan Electronics is currently generating about 0.01 per unit of volatility. If you would invest  9,775  in YuantaP shares Taiwan Electronics on September 2, 2024 and sell it today you would earn a total of  55.00  from holding YuantaP shares Taiwan Electronics or generate 0.56% return on investment over 90 days.

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

Paradigm SP GSCI  vs.  YuantaP shares Taiwan Electron

Paradigm SP GSCI

Risk-Adjusted Performance

0 of 100

Very Weak

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

YuantaP shares Taiwan

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Paradigm and YuantaP Shares

The main advantage of trading using opposite Paradigm and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradigm 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 Paradigm SP GSCI and YuantaP shares Taiwan Electronics 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.