Correlation Between Yuanta Financial and Macauto Industrial

Can any of the company-specific risk be diversified away by investing in both Yuanta Financial and Macauto Industrial 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 Macauto Industrial 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 Macauto Industrial Co, you can compare the effects of market volatilities on Yuanta Financial and Macauto Industrial 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 Macauto Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta Financial and Macauto Industrial.

Diversification Opportunities for Yuanta Financial and Macauto Industrial

-0.81

Correlation Coefficient

Yuanta Financial  Macauto Industrial

Pay attention - limited upside

The 3 months correlation between Yuanta and Macauto is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Financial Holdings and Macauto Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macauto Industrial 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 Macauto Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macauto Industrial has no effect on the direction of Yuanta Financial i.e., Yuanta Financial and Macauto Industrial go up and down completely randomly.

Pair Corralation between Yuanta Financial and Macauto Industrial

Assuming the 90 days trading horizon Yuanta Financial Holdings is expected to generate 0.94 times more return on investment than Macauto Industrial. However, Yuanta Financial Holdings is 1.07 times less risky than Macauto Industrial. It trades about 0.07 of its potential returns per unit of risk. Macauto Industrial Co is currently generating about -0.14 per unit of risk. If you would invest  3,270  in Yuanta Financial Holdings on October 23, 2024 and sell it today you would earn a total of  155.00  from holding Yuanta Financial Holdings or generate 4.74% return on investment over 90 days.

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

Yuanta Financial Holdings  vs.  Macauto Industrial Co

Yuanta Financial Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Financial Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Macauto Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macauto Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Yuanta Financial and Macauto Industrial

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

The idea behind Yuanta Financial Holdings and Macauto Industrial 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.