Correlation Between Chia Yi and Yuanta Futures

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

By analyzing existing cross correlation between Chia Yi Steel and Yuanta Futures Co, you can compare the effects of market volatilities on Chia Yi and Yuanta Futures 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 Chia Yi with a short position of Yuanta Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Yi and Yuanta Futures.

Diversification Opportunities for Chia Yi and Yuanta Futures

0.2

Correlation Coefficient

Chia Yi  Yuanta Futures

Modest diversification

The 3 months correlation between Chia and Yuanta is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Chia Yi Steel and Yuanta Futures Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Futures and Chia Yi 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 Chia Yi Steel are associated (or correlated) with Yuanta Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Futures has no effect on the direction of Chia Yi i.e., Chia Yi and Yuanta Futures go up and down completely randomly.

Pair Corralation between Chia Yi and Yuanta Futures

Assuming the 90 days trading horizon Chia Yi is expected to generate 2.51 times less return on investment than Yuanta Futures. In addition to that, Chia Yi is 2.52 times more volatile than Yuanta Futures Co. It trades about 0.02 of its total potential returns per unit of risk. Yuanta Futures Co is currently generating about 0.13 per unit of volatility. If you would invest  4,522  in Yuanta Futures Co on October 8, 2024 and sell it today you would earn a total of  4,078  from holding Yuanta Futures Co or generate 90.18% return on investment over 90 days.

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

Chia Yi Steel  vs.  Yuanta Futures Co

Chia Yi Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chia Yi Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chia Yi is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yuanta Futures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yuanta Futures Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yuanta Futures is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chia Yi and Yuanta Futures

The main advantage of trading using opposite Chia Yi and Yuanta Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia Yi position performs unexpectedly, Yuanta Futures 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 Futures will offset losses from the drop in Yuanta Futures' long position.

The idea behind Chia Yi Steel and Yuanta Futures Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.