Correlation Between Cathay Bloomberg and Yuanta Daily

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

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

Diversification Opportunities for Cathay Bloomberg and Yuanta Daily

0.71

Correlation Coefficient

Cathay Bloomberg  Yuanta Daily

Poor diversification

The 3 months correlation between Cathay and Yuanta is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Bloomberg Barclays and Yuanta Daily Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily Taiwan and Cathay Bloomberg 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 Cathay Bloomberg Barclays 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 Taiwan has no effect on the direction of Cathay Bloomberg i.e., Cathay Bloomberg and Yuanta Daily go up and down completely randomly.

Pair Corralation between Cathay Bloomberg and Yuanta Daily

Assuming the 90 days trading horizon Cathay Bloomberg Barclays is expected to generate 0.54 times more return on investment than Yuanta Daily. However, Cathay Bloomberg Barclays is 1.87 times less risky than Yuanta Daily. It trades about 0.0 of its potential returns per unit of risk. Yuanta Daily Taiwan is currently generating about -0.02 per unit of risk. If you would invest  3,292  in Cathay Bloomberg Barclays on August 31, 2024 and sell it today you would lose (9.00) from holding Cathay Bloomberg Barclays or give up 0.27% of portfolio value over 90 days.

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

Cathay Bloomberg Barclays  vs.  Yuanta Daily Taiwan

Cathay Bloomberg Barclays

Risk-Adjusted Performance

0 of 100

Very Weak

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

Yuanta Daily Taiwan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cathay Bloomberg and Yuanta Daily

The main advantage of trading using opposite Cathay Bloomberg and Yuanta Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Bloomberg 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 Cathay Bloomberg Barclays and Yuanta Daily Taiwan 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.