Correlation Between YuantaP Shares and Optimax Technology

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

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

Diversification Opportunities for YuantaP Shares and Optimax Technology

0.77

Correlation Coefficient

YuantaP Shares  Optimax Technology

Poor diversification

The 3 months correlation between YuantaP and Optimax is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Optimax Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimax Technology Corp and YuantaP Shares 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 YuantaP shares Taiwan Top are associated (or correlated) with Optimax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimax Technology Corp has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Optimax Technology go up and down completely randomly.

Pair Corralation between YuantaP Shares and Optimax Technology

Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to generate 0.51 times more return on investment than Optimax Technology. However, YuantaP shares Taiwan Top is 1.96 times less risky than Optimax Technology. It trades about 0.13 of its potential returns per unit of risk. Optimax Technology Corp is currently generating about -0.02 per unit of risk. If you would invest  14,695  in YuantaP shares Taiwan Top on February 2, 2024 and sell it today you would earn a total of  1,130  from holding YuantaP shares Taiwan Top or generate 7.69% return on investment over 90 days.

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

YuantaP shares Taiwan Top  vs.  Optimax Technology Corp

YuantaP shares Taiwan

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Top are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, YuantaP Shares showed solid returns over the last few months and may actually be approaching a breakup point.

Optimax Technology Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Optimax Technology Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Optimax Technology 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 YuantaP Shares and Optimax Technology

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

The idea behind YuantaP shares Taiwan Top and Optimax Technology Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.