Correlation Between Capital Ice and Yuanta Daily

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

By analyzing existing cross correlation between Capital Ice 7 and Yuanta Daily Taiwan, you can compare the effects of market volatilities on Capital Ice 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 Capital Ice with a short position of Yuanta Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Ice and Yuanta Daily.

Diversification Opportunities for Capital Ice and Yuanta Daily

0.7

Correlation Coefficient

Capital Ice  Yuanta Daily

Poor diversification

The 3 months correlation between Capital and Yuanta is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Capital Ice 7 and Yuanta Daily Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily Taiwan and Capital Ice 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 Capital Ice 7 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 Taiwan has no effect on the direction of Capital Ice i.e., Capital Ice and Yuanta Daily go up and down completely randomly.

Pair Corralation between Capital Ice and Yuanta Daily

Assuming the 90 days trading horizon Capital Ice 7 is expected to generate 0.48 times more return on investment than Yuanta Daily. However, Capital Ice 7 is 2.08 times less risky than Yuanta Daily. It trades about 0.08 of its potential returns per unit of risk. Yuanta Daily Taiwan is currently generating about -0.04 per unit of risk. If you would invest  4,234  in Capital Ice 7 on October 24, 2024 and sell it today you would earn a total of  36.00  from holding Capital Ice 7 or generate 0.85% return on investment over 90 days.

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

Capital Ice 7  vs.  Yuanta Daily Taiwan

Capital Ice 7

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Ice 7 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Capital Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Yuanta Daily Taiwan

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Daily Taiwan are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yuanta Daily sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Ice and Yuanta Daily

The main advantage of trading using opposite Capital Ice and Yuanta Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Ice 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 Capital Ice 7 and Yuanta Daily Taiwan 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.