Correlation Between Yuanta Futures and Tung Ho

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

By analyzing existing cross correlation between Yuanta Futures Co and Tung Ho Steel, you can compare the effects of market volatilities on Yuanta Futures and Tung Ho 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 Futures with a short position of Tung Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta Futures and Tung Ho.

Diversification Opportunities for Yuanta Futures and Tung Ho

0.71

Correlation Coefficient

Yuanta Futures  Tung Ho

Poor diversification

The 3 months correlation between Yuanta and Tung is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Futures Co and Tung Ho Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tung Ho Steel and Yuanta Futures 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 Futures Co are associated (or correlated) with Tung Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tung Ho Steel has no effect on the direction of Yuanta Futures i.e., Yuanta Futures and Tung Ho go up and down completely randomly.

Pair Corralation between Yuanta Futures and Tung Ho

Assuming the 90 days trading horizon Yuanta Futures Co is expected to under-perform the Tung Ho. But the stock apears to be less risky and, when comparing its historical volatility, Yuanta Futures Co is 1.35 times less risky than Tung Ho. The stock trades about -0.15 of its potential returns per unit of risk. The Tung Ho Steel is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  6,930  in Tung Ho Steel on October 25, 2024 and sell it today you would lose (110.00) from holding Tung Ho Steel or give up 1.59% of portfolio value over 90 days.

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

Yuanta Futures Co  vs.  Tung Ho Steel

Yuanta Futures

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tung Ho Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tung Ho Steel 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 Futures and Tung Ho

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

The idea behind Yuanta Futures Co and Tung Ho Steel 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.