Correlation Between CTBC 15 and Yuanta Daily

Can any of the company-specific risk be diversified away by investing in both CTBC 15 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 CTBC 15 and Yuanta Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CTBC 15 Developed and Yuanta Daily Taiwan, you can compare the effects of market volatilities on CTBC 15 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 CTBC 15 with a short position of Yuanta Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC 15 and Yuanta Daily.

Diversification Opportunities for CTBC 15 and Yuanta Daily

0.27

Correlation Coefficient

CTBC 15  Yuanta Daily

Modest diversification

The 3 months correlation between CTBC and Yuanta is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CTBC 15 Developed 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 CTBC 15 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 CTBC 15 Developed 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 CTBC 15 i.e., CTBC 15 and Yuanta Daily go up and down completely randomly.

Pair Corralation between CTBC 15 and Yuanta Daily

Assuming the 90 days trading horizon CTBC 15 is expected to generate 2.81 times less return on investment than Yuanta Daily. But when comparing it to its historical volatility, CTBC 15 Developed is 1.82 times less risky than Yuanta Daily. It trades about 0.04 of its potential returns per unit of risk. Yuanta Daily Taiwan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,281  in Yuanta Daily Taiwan on December 23, 2024 and sell it today you would earn a total of  94.00  from holding Yuanta Daily Taiwan or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

CTBC 15 Developed  vs.  Yuanta Daily Taiwan

CTBC 15 Developed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CTBC 15 Developed are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CTBC 15 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

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Daily Taiwan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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 CTBC 15 and Yuanta Daily

The main advantage of trading using opposite CTBC 15 and Yuanta Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC 15 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 CTBC 15 Developed 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.