Correlation Between Lungyen Life and YuantaP Shares

Can any of the company-specific risk be diversified away by investing in both Lungyen Life and YuantaP Shares 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 Lungyen Life and YuantaP Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lungyen Life Service and YuantaP shares Taiwan Mid Cap, you can compare the effects of market volatilities on Lungyen Life and YuantaP Shares 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 Lungyen Life with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lungyen Life and YuantaP Shares.

Diversification Opportunities for Lungyen Life and YuantaP Shares

-0.68

Correlation Coefficient

Lungyen Life  YuantaP Shares

Excellent diversification

The 3 months correlation between Lungyen and YuantaP is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lungyen Life Service and YuantaP shares Taiwan Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Lungyen Life 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 Lungyen Life Service are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of Lungyen Life i.e., Lungyen Life and YuantaP Shares go up and down completely randomly.

Pair Corralation between Lungyen Life and YuantaP Shares

Assuming the 90 days trading horizon Lungyen Life Service is expected to generate 1.77 times more return on investment than YuantaP Shares. However, Lungyen Life is 1.77 times more volatile than YuantaP shares Taiwan Mid Cap. It trades about 0.08 of its potential returns per unit of risk. YuantaP shares Taiwan Mid Cap is currently generating about 0.03 per unit of risk. If you would invest  3,940  in Lungyen Life Service on October 5, 2024 and sell it today you would earn a total of  1,500  from holding Lungyen Life Service or generate 38.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Lungyen Life Service  vs.  YuantaP shares Taiwan Mid Cap

Lungyen Life Service

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lungyen Life Service are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lungyen Life showed solid returns over the last few months and may actually be approaching a breakup point.

YuantaP shares Taiwan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YuantaP shares Taiwan Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, YuantaP Shares 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 Lungyen Life and YuantaP Shares

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

The idea behind Lungyen Life Service and YuantaP shares Taiwan Mid Cap 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..