Correlation Between Shin Kong and YuantaP Shares

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

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

Diversification Opportunities for Shin Kong and YuantaP Shares

-0.32

Correlation Coefficient

Shin Kong  YuantaP Shares

Very good diversification

The 3 months correlation between Shin and YuantaP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong FTSE and YuantaP shares Taiwan Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Shin Kong 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 Shin Kong FTSE 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 Shin Kong i.e., Shin Kong and YuantaP Shares go up and down completely randomly.

Pair Corralation between Shin Kong and YuantaP Shares

Assuming the 90 days trading horizon Shin Kong FTSE is expected to under-perform the YuantaP Shares. But the etf apears to be less risky and, when comparing its historical volatility, Shin Kong FTSE is 2.63 times less risky than YuantaP Shares. The etf trades about -0.03 of its potential returns per unit of risk. The YuantaP shares Taiwan Top is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  14,280  in YuantaP shares Taiwan Top on January 31, 2024 and sell it today you would earn a total of  1,600  from holding YuantaP shares Taiwan Top or generate 11.2% return on investment over 90 days.

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

Shin Kong FTSE  vs.  YuantaP shares Taiwan Top

Shin Kong FTSE

Risk-Adjusted Performance

0 of 100

Very Weak

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

YuantaP shares Taiwan

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Top are ranked lower than 17 (%) 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.

Pair Trading with Shin Kong and YuantaP Shares

The main advantage of trading using opposite Shin Kong and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Kong 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 Shin Kong FTSE and YuantaP shares Taiwan Top 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.