Correlation Between CTBC TIP and YuantaP Shares

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

By analyzing existing cross correlation between CTBC TIP Customized and YuantaP shares Taiwan Top, you can compare the effects of market volatilities on CTBC TIP 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 CTBC TIP with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC TIP and YuantaP Shares.

Diversification Opportunities for CTBC TIP and YuantaP Shares

0.78

Correlation Coefficient

CTBC TIP  YuantaP Shares

Poor diversification

The 3 months correlation between CTBC and YuantaP is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CTBC TIP Customized 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 CTBC TIP 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 TIP Customized 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 CTBC TIP i.e., CTBC TIP and YuantaP Shares go up and down completely randomly.

Pair Corralation between CTBC TIP and YuantaP Shares

Assuming the 90 days trading horizon CTBC TIP Customized is expected to generate 1.15 times more return on investment than YuantaP Shares. However, CTBC TIP is 1.15 times more volatile than YuantaP shares Taiwan Top. It trades about 0.1 of its potential returns per unit of risk. YuantaP shares Taiwan Top is currently generating about 0.1 per unit of risk. If you would invest  1,134  in CTBC TIP Customized on October 11, 2024 and sell it today you would earn a total of  992.00  from holding CTBC TIP Customized or generate 87.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.75%
Values	Daily Returns

CTBC TIP Customized  vs.  YuantaP shares Taiwan Top

CTBC TIP Customized

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTBC TIP Customized are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CTBC TIP is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

YuantaP shares Taiwan

Risk-Adjusted Performance

5 of 100

Modest

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

The main advantage of trading using opposite CTBC TIP and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC TIP 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 CTBC TIP Customized 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 Transaction History module to view history of all your transactions and understand their impact on performance.