Correlation Between Yuanta Daily and Yuanta SP

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

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

Diversification Opportunities for Yuanta Daily and Yuanta SP

0.42

Correlation Coefficient

Yuanta Daily  Yuanta SP

Very weak diversification

The 3 months correlation between Yuanta and Yuanta is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Daily CSI and Yuanta SP GSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta SP GSCI and Yuanta Daily 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 Daily CSI are associated (or correlated) with Yuanta SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta SP GSCI has no effect on the direction of Yuanta Daily i.e., Yuanta Daily and Yuanta SP go up and down completely randomly.

Pair Corralation between Yuanta Daily and Yuanta SP

Assuming the 90 days trading horizon Yuanta Daily CSI is expected to generate 5.05 times more return on investment than Yuanta SP. However, Yuanta Daily is 5.05 times more volatile than Yuanta SP GSCI. It trades about 0.14 of its potential returns per unit of risk. Yuanta SP GSCI is currently generating about 0.07 per unit of risk. If you would invest  1,156  in Yuanta Daily CSI on September 13, 2024 and sell it today you would earn a total of  495.00  from holding Yuanta Daily CSI or generate 42.82% return on investment over 90 days.

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

Yuanta Daily CSI  vs.  Yuanta SP GSCI

Yuanta Daily CSI

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Daily CSI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Yuanta Daily sustained solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Yuanta Daily and Yuanta SP

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

The idea behind Yuanta Daily CSI and Yuanta SP GSCI 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..