Correlation Between Information Technology and YuantaP Shares

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Can any of the company-specific risk be diversified away by investing in both Information Technology 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 Information Technology and YuantaP Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Technology Total and YuantaP shares SSE50, you can compare the effects of market volatilities on Information Technology 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 Information Technology with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Technology and YuantaP Shares.

Diversification Opportunities for Information Technology and YuantaP Shares

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Information and YuantaP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Information Technology Total and YuantaP shares SSE50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares SSE50 and Information Technology 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 Information Technology Total 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 SSE50 has no effect on the direction of Information Technology i.e., Information Technology and YuantaP Shares go up and down completely randomly.

Pair Corralation between Information Technology and YuantaP Shares

Assuming the 90 days trading horizon Information Technology is expected to generate 1.91 times less return on investment than YuantaP Shares. But when comparing it to its historical volatility, Information Technology Total is 1.27 times less risky than YuantaP Shares. It trades about 0.06 of its potential returns per unit of risk. YuantaP shares SSE50 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,729  in YuantaP shares SSE50 on September 6, 2024 and sell it today you would earn a total of  394.00  from holding YuantaP shares SSE50 or generate 14.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.41%
ValuesDaily Returns

Information Technology Total  vs.  YuantaP shares SSE50

 Performance 
       Timeline  
Information Technology 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Information Technology Total are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Information Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.
YuantaP shares SSE50 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares SSE50 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, YuantaP Shares sustained solid returns over the last few months and may actually be approaching a breakup point.

Information Technology and YuantaP Shares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Information Technology and YuantaP Shares

The main advantage of trading using opposite Information Technology and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Technology 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 Information Technology Total and YuantaP shares SSE50 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.
Check out your portfolio center.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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