Correlation Between Yuanta SP and Yuanta 10

Can any of the company-specific risk be diversified away by investing in both Yuanta SP and Yuanta 10 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 10 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 10 Investment, you can compare the effects of market volatilities on Yuanta SP and Yuanta 10 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 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta SP and Yuanta 10.

Diversification Opportunities for Yuanta SP and Yuanta 10

-0.55

Correlation Coefficient

Yuanta SP  Yuanta 10

Excellent diversification

The 3 months correlation between Yuanta and Yuanta is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta SP GSCI and Yuanta 10 Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta 10 Investment 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 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta 10 Investment has no effect on the direction of Yuanta SP i.e., Yuanta SP and Yuanta 10 go up and down completely randomly.

Pair Corralation between Yuanta SP and Yuanta 10

Assuming the 90 days trading horizon Yuanta SP GSCI is expected to generate 1.71 times more return on investment than Yuanta 10. However, Yuanta SP is 1.71 times more volatile than Yuanta 10 Investment. It trades about 0.06 of its potential returns per unit of risk. Yuanta 10 Investment is currently generating about -0.04 per unit of risk. If you would invest  3,002  in Yuanta SP GSCI on September 14, 2024 and sell it today you would earn a total of  112.00  from holding Yuanta SP GSCI or generate 3.73% return on investment over 90 days.

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

Yuanta SP GSCI  vs.  Yuanta 10 Investment

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 current stock price disturbance, may contribute to short-term losses for the investors.

Yuanta 10 Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yuanta 10 Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yuanta 10 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yuanta SP and Yuanta 10

The main advantage of trading using opposite Yuanta SP and Yuanta 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanta SP position performs unexpectedly, Yuanta 10 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 10 will offset losses from the drop in Yuanta 10's long position.

The idea behind Yuanta SP GSCI and Yuanta 10 Investment 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.