Correlation Between Yuanta Futures and China Airlines

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

Diversification Opportunities for Yuanta Futures and China Airlines

0.0

Correlation Coefficient

Yuanta Futures  China Airlines

Pay attention - limited upside

The 3 months correlation between Yuanta and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Futures Co and China Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Airlines 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 China Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Airlines has no effect on the direction of Yuanta Futures i.e., Yuanta Futures and China Airlines go up and down completely randomly.

Pair Corralation between Yuanta Futures and China Airlines

Assuming the 90 days trading horizon Yuanta Futures Co is expected to generate 0.71 times more return on investment than China Airlines. However, Yuanta Futures Co is 1.41 times less risky than China Airlines. It trades about -0.12 of its potential returns per unit of risk. China Airlines is currently generating about -0.1 per unit of risk. If you would invest  8,740  in Yuanta Futures Co on December 24, 2024 and sell it today you would lose (590.00) from holding Yuanta Futures Co or give up 6.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Yuanta Futures Co  vs.  China Airlines

Yuanta Futures

Risk-Adjusted Performance

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 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.

China Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Airlines 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 China Airlines

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

The idea behind Yuanta Futures Co and China Airlines 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.