Correlation Between EnTie Commercial and Yuanta Financial

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

By analyzing existing cross correlation between EnTie Commercial Bank and Yuanta Financial Holdings, you can compare the effects of market volatilities on EnTie Commercial and Yuanta Financial 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 EnTie Commercial with a short position of Yuanta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnTie Commercial and Yuanta Financial.

Diversification Opportunities for EnTie Commercial and Yuanta Financial

0.24

Correlation Coefficient

EnTie Commercial  Yuanta Financial

Modest diversification

The 3 months correlation between EnTie and Yuanta is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding EnTie Commercial Bank and Yuanta Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Financial Holdings and EnTie Commercial 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 EnTie Commercial Bank are associated (or correlated) with Yuanta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Financial Holdings has no effect on the direction of EnTie Commercial i.e., EnTie Commercial and Yuanta Financial go up and down completely randomly.

Pair Corralation between EnTie Commercial and Yuanta Financial

Assuming the 90 days trading horizon EnTie Commercial is expected to generate 11.0 times less return on investment than Yuanta Financial. In addition to that, EnTie Commercial is 1.1 times more volatile than Yuanta Financial Holdings. It trades about 0.0 of its total potential returns per unit of risk. Yuanta Financial Holdings is currently generating about 0.01 per unit of volatility. If you would invest  3,475  in Yuanta Financial Holdings on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Yuanta Financial Holdings or generate 0.29% return on investment over 90 days.

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

EnTie Commercial Bank  vs.  Yuanta Financial Holdings

EnTie Commercial Bank

Risk-Adjusted Performance

Very Weak

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

Yuanta Financial Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yuanta Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yuanta Financial 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 EnTie Commercial and Yuanta Financial

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

The idea behind EnTie Commercial Bank and Yuanta Financial Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.