Correlation Between Yuanta SP and Yuanta Daily

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

By analyzing existing cross correlation between Yuanta SP GSCI and Yuanta Daily CSI, you can compare the effects of market volatilities on Yuanta SP and Yuanta Daily 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 SP with a short position of Yuanta Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta SP and Yuanta Daily.

Diversification Opportunities for Yuanta SP and Yuanta Daily

0.56

Correlation Coefficient

Yuanta SP  Yuanta Daily

Very weak diversification

The 3 months correlation between Yuanta and Yuanta is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta SP GSCI and Yuanta Daily CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily CSI and Yuanta SP 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 SP GSCI are associated (or correlated) with Yuanta Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Daily CSI has no effect on the direction of Yuanta SP i.e., Yuanta SP and Yuanta Daily go up and down completely randomly.

Pair Corralation between Yuanta SP and Yuanta Daily

Assuming the 90 days trading horizon Yuanta SP is expected to generate 8.33 times less return on investment than Yuanta Daily. But when comparing it to its historical volatility, Yuanta SP GSCI is 4.95 times less risky than Yuanta Daily. It trades about 0.06 of its potential returns per unit of risk. Yuanta Daily CSI is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,213  in Yuanta Daily CSI on September 4, 2024 and sell it today you would earn a total of  371.00  from holding Yuanta Daily CSI or generate 30.59% return on investment over 90 days.

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

Yuanta SP GSCI  vs.  Yuanta Daily CSI

Yuanta SP GSCI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta SP GSCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yuanta SP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Yuanta Daily CSI

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Daily CSI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yuanta Daily sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yuanta SP and Yuanta Daily

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

The idea behind Yuanta SP GSCI and Yuanta Daily CSI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.