Correlation Between Yuanta Global and Yuanta Daily

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

Diversification Opportunities for Yuanta Global and Yuanta Daily

0.37

Correlation Coefficient

Yuanta Global  Yuanta Daily

Weak diversification

The 3 months correlation between Yuanta and Yuanta is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Global NexGen 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 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 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 Yuanta Global i.e., Yuanta Global and Yuanta Daily go up and down completely randomly.

Pair Corralation between Yuanta Global and Yuanta Daily

Assuming the 90 days trading horizon Yuanta Global is expected to generate 112.49 times less return on investment than Yuanta Daily. But when comparing it to its historical volatility, Yuanta Global NexGen is 76.12 times less risky than Yuanta Daily. It trades about 0.09 of its potential returns per unit of risk. Yuanta Daily Taiwan is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  324.00  in Yuanta Daily Taiwan on October 25, 2024 and sell it today you would earn a total of  1,903  from holding Yuanta Daily Taiwan or generate 587.35% return on investment over 90 days.

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

Yuanta Global NexGen  vs.  Yuanta Daily Taiwan

Yuanta Global NexGen

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Global NexGen are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

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 Yuanta Global and Yuanta Daily

The main advantage of trading using opposite Yuanta Global and Yuanta Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanta Global 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 Global NexGen 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.