Correlation Between Taiwan Mask and Yageo Corp

Can any of the company-specific risk be diversified away by investing in both Taiwan Mask and Yageo Corp 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 Taiwan Mask and Yageo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Taiwan Mask and Yageo Corp

0.38

Correlation Coefficient

Taiwan Mask  Yageo Corp

Weak diversification

The 3 months correlation between Taiwan and Yageo is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Mask Corp and Yageo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yageo Corp and Taiwan Mask 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 Taiwan Mask Corp are associated (or correlated) with Yageo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yageo Corp has no effect on the direction of Taiwan Mask i.e., Taiwan Mask and Yageo Corp go up and down completely randomly.

Pair Corralation between Taiwan Mask and Yageo Corp

Assuming the 90 days trading horizon Taiwan Mask Corp is expected to under-perform the Yageo Corp. In addition to that, Taiwan Mask is 1.1 times more volatile than Yageo Corp. It trades about -0.23 of its total potential returns per unit of risk. Yageo Corp is currently generating about 0.21 per unit of volatility. If you would invest  53,500  in Yageo Corp on October 9, 2024 and sell it today you would earn a total of  3,400  from holding Yageo Corp or generate 6.36% return on investment over 90 days.

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

Taiwan Mask Corp  vs.  Yageo Corp

Taiwan Mask Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Mask Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Yageo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yageo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yageo Corp 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 Taiwan Mask and Yageo Corp

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

The idea behind Taiwan Mask Corp and Yageo Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.