Correlation Between Taiwan Shin and Yulon Finance

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Can any of the company-specific risk be diversified away by investing in both Taiwan Shin and Yulon Finance 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 Shin and Yulon Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Shin Kong and Yulon Finance Corp, you can compare the effects of market volatilities on Taiwan Shin and Yulon Finance 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 Shin with a short position of Yulon Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Shin and Yulon Finance.

Diversification Opportunities for Taiwan Shin and Yulon Finance

TaiwanYulonDiversified AwayTaiwanYulonDiversified Away100%
-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Taiwan and Yulon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Shin Kong and Yulon Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Finance Corp and Taiwan Shin 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 Shin Kong are associated (or correlated) with Yulon Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Finance Corp has no effect on the direction of Taiwan Shin i.e., Taiwan Shin and Yulon Finance go up and down completely randomly.

Pair Corralation between Taiwan Shin and Yulon Finance

Assuming the 90 days trading horizon Taiwan Shin is expected to generate 3.6 times less return on investment than Yulon Finance. But when comparing it to its historical volatility, Taiwan Shin Kong is 4.47 times less risky than Yulon Finance. It trades about 0.2 of its potential returns per unit of risk. Yulon Finance Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  11,600  in Yulon Finance Corp on November 29, 2024 and sell it today you would earn a total of  400.00  from holding Yulon Finance Corp or generate 3.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Taiwan Shin Kong  vs.  Yulon Finance Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.159925 9941
       Timeline  
Taiwan Shin Kong 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Shin Kong are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taiwan Shin is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb40.640.740.840.94141.141.241.341.4
Yulon Finance Corp 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Yulon Finance Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Yulon Finance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb100105110115120

Taiwan Shin and Yulon Finance Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.88-0.61-0.34-0.08840.01190.120.390.660.93 1234
JavaScript chart by amCharts 3.21.159925 9941
       Returns  

Pair Trading with Taiwan Shin and Yulon Finance

The main advantage of trading using opposite Taiwan Shin and Yulon Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Shin position performs unexpectedly, Yulon Finance 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 Yulon Finance will offset losses from the drop in Yulon Finance's long position.
The idea behind Taiwan Shin Kong and Yulon Finance Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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