Correlation Between Sporton International and YuantaP Shares

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

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

Diversification Opportunities for Sporton International and YuantaP Shares

0.73

Correlation Coefficient

Sporton International  YuantaP Shares

Poor diversification

The 3 months correlation between Sporton and YuantaP is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sporton International and YuantaP shares Taiwan Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Sporton International 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 Sporton International are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of Sporton International i.e., Sporton International and YuantaP Shares go up and down completely randomly.

Pair Corralation between Sporton International and YuantaP Shares

Assuming the 90 days trading horizon Sporton International is expected to under-perform the YuantaP Shares. In addition to that, Sporton International is 1.31 times more volatile than YuantaP shares Taiwan Mid Cap. It trades about -0.06 of its total potential returns per unit of risk. YuantaP shares Taiwan Mid Cap is currently generating about -0.02 per unit of volatility. 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

Sporton International  vs.  YuantaP shares Taiwan Mid Cap

Sporton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sporton International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sporton International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

YuantaP shares Taiwan

Risk-Adjusted Performance

0 of 100

Very 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.

Pair Trading with Sporton International and YuantaP Shares

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

The idea behind Sporton International and YuantaP shares Taiwan Mid Cap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.