Correlation Between Yuanta Global and YuantaP Shares

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

Diversification Opportunities for Yuanta Global and YuantaP Shares

0.73

Correlation Coefficient

Yuanta Global  YuantaP Shares

Poor diversification

The 3 months correlation between Yuanta and YuantaP is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Global NexGen 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 Global 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 Global NexGen 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 Global i.e., Yuanta Global and YuantaP Shares go up and down completely randomly.

Pair Corralation between Yuanta Global and YuantaP Shares

Assuming the 90 days trading horizon Yuanta Global NexGen is expected to under-perform the YuantaP Shares. In addition to that, Yuanta Global is 1.08 times more volatile than YuantaP shares Taiwan Top. It trades about -0.14 of its total potential returns per unit of risk. YuantaP shares Taiwan Top is currently generating about -0.12 per unit of volatility. If you would invest  19,270  in YuantaP shares Taiwan Top on December 4, 2024 and sell it today you would lose (465.00) from holding YuantaP shares Taiwan Top or give up 2.41% of portfolio value over 90 days.

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

Yuanta Global NexGen  vs.  YuantaP shares Taiwan Top

Yuanta Global NexGen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yuanta Global NexGen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Yuanta Global is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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 Global and YuantaP Shares

The main advantage of trading using opposite Yuanta Global and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanta Global 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 Global NexGen 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.