Correlation Between YuantaP Shares and San Shing

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

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

Diversification Opportunities for YuantaP Shares and San Shing

0.67

Correlation Coefficient

YuantaP Shares  San Shing

Poor diversification

The 3 months correlation between YuantaP and San is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and San Shing Fastech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Shing Fastech and YuantaP Shares 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 YuantaP shares Taiwan Mid Cap are associated (or correlated) with San Shing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Shing Fastech has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and San Shing go up and down completely randomly.

Pair Corralation between YuantaP Shares and San Shing

Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to generate 1.67 times more return on investment than San Shing. However, YuantaP Shares is 1.67 times more volatile than San Shing Fastech. It trades about -0.02 of its potential returns per unit of risk. San Shing Fastech is currently generating about -0.06 per unit of risk. If you would invest  7,930  in YuantaP shares Taiwan Mid Cap on September 12, 2024 and sell it today you would lose (125.00) from holding YuantaP shares Taiwan Mid Cap or give up 1.58% of portfolio value over 90 days.

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

YuantaP shares Taiwan Mid Cap  vs.  San Shing Fastech

YuantaP shares Taiwan

Risk-Adjusted Performance

0 of 100

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.

San Shing Fastech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days San Shing Fastech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, San Shing 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 YuantaP Shares and San Shing

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

The idea behind YuantaP shares Taiwan Mid Cap and San Shing Fastech 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.