Correlation Between Taiwan Mobile and Yuan High

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

By analyzing existing cross correlation between Taiwan Mobile Co and Yuan High Tech Development, you can compare the effects of market volatilities on Taiwan Mobile and Yuan High 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 Mobile with a short position of Yuan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Mobile and Yuan High.

Diversification Opportunities for Taiwan Mobile and Yuan High

0.21

Correlation Coefficient

Taiwan Mobile  Yuan High

Modest diversification

The 3 months correlation between Taiwan and Yuan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Mobile Co and Yuan High Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuan High Tech and Taiwan Mobile 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 Mobile Co are associated (or correlated) with Yuan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuan High Tech has no effect on the direction of Taiwan Mobile i.e., Taiwan Mobile and Yuan High go up and down completely randomly.

Pair Corralation between Taiwan Mobile and Yuan High

Assuming the 90 days trading horizon Taiwan Mobile is expected to generate 27.76 times less return on investment than Yuan High. But when comparing it to its historical volatility, Taiwan Mobile Co is 2.58 times less risky than Yuan High. It trades about 0.02 of its potential returns per unit of risk. Yuan High Tech Development is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  14,850  in Yuan High Tech Development on September 22, 2024 and sell it today you would earn a total of  2,450  from holding Yuan High Tech Development or generate 16.5% return on investment over 90 days.

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

Taiwan Mobile Co  vs.  Yuan High Tech Development

Taiwan Mobile

Risk-Adjusted Performance

0 of 100

Very Weak

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

Yuan High Tech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yuan High Tech Development are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Yuan High 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 Mobile and Yuan High

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

The idea behind Taiwan Mobile Co and Yuan High Tech Development 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.