Correlation Between Yuanta Financial and Yulon Finance

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

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

Diversification Opportunities for Yuanta Financial and Yulon Finance

-0.74

Correlation Coefficient

Yuanta Financial  Yulon Finance

Pay attention - limited upside

The 3 months correlation between Yuanta and Yulon is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Financial Holdings and Yulon Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Finance Corp and Yuanta Financial 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 Yuanta Financial Holdings are associated (or correlated) with Yulon Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Finance Corp has no effect on the direction of Yuanta Financial i.e., Yuanta Financial and Yulon Finance go up and down completely randomly.

Pair Corralation between Yuanta Financial and Yulon Finance

Assuming the 90 days trading horizon Yuanta Financial is expected to generate 5.38 times less return on investment than Yulon Finance. But when comparing it to its historical volatility, Yuanta Financial Holdings is 2.14 times less risky than Yulon Finance. It trades about 0.06 of its potential returns per unit of risk. Yulon Finance Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  11,100  in Yulon Finance Corp on October 9, 2024 and sell it today you would earn a total of  900.00  from holding Yulon Finance Corp or generate 8.11% return on investment over 90 days.

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

Yuanta Financial Holdings  vs.  Yulon Finance Corp

Yuanta Financial Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Financial Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yuanta Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Yulon Finance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yulon Finance 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.

Pair Trading with Yuanta Financial and Yulon Finance

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

The idea behind Yuanta Financial Holdings and Yulon Finance 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.