Correlation Between Yuanta STOXX and Yuanta Daily

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

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

Diversification Opportunities for Yuanta STOXX and Yuanta Daily

-0.95

Correlation Coefficient

Yuanta STOXX  Yuanta Daily

Pay attention - limited upside

The 3 months correlation between Yuanta and Yuanta is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta STOXX Global and Yuanta Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily SP and Yuanta STOXX 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 STOXX Global are associated (or correlated) with Yuanta Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Daily SP has no effect on the direction of Yuanta STOXX i.e., Yuanta STOXX and Yuanta Daily go up and down completely randomly.

Pair Corralation between Yuanta STOXX and Yuanta Daily

Assuming the 90 days trading horizon Yuanta STOXX Global is expected to generate 1.75 times more return on investment than Yuanta Daily. However, Yuanta STOXX is 1.75 times more volatile than Yuanta Daily SP. It trades about 0.13 of its potential returns per unit of risk. Yuanta Daily SP is currently generating about -0.14 per unit of risk. If you would invest  4,413  in Yuanta STOXX Global on September 17, 2024 and sell it today you would earn a total of  2,867  from holding Yuanta STOXX Global or generate 64.97% return on investment over 90 days.

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

Yuanta STOXX Global  vs.  Yuanta Daily SP

Yuanta STOXX Global

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta STOXX Global are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Yuanta STOXX unveiled solid returns over the last few months and may actually be approaching a breakup point.

Yuanta Daily SP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yuanta STOXX and Yuanta Daily

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

The idea behind Yuanta STOXX Global and Yuanta Daily SP 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.