Correlation Between YuantaP Shares and Celxpert Energy

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

By analyzing existing cross correlation between YuantaP shares Taiwan Electronics and Celxpert Energy, you can compare the effects of market volatilities on YuantaP Shares and Celxpert Energy 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 Celxpert Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Celxpert Energy.

Diversification Opportunities for YuantaP Shares and Celxpert Energy

-0.76

Correlation Coefficient

YuantaP Shares  Celxpert Energy

Pay attention - limited upside

The 3 months correlation between YuantaP and Celxpert is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Electron and Celxpert Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celxpert Energy 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 Electronics are associated (or correlated) with Celxpert Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celxpert Energy has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Celxpert Energy go up and down completely randomly.

Pair Corralation between YuantaP Shares and Celxpert Energy

Assuming the 90 days trading horizon YuantaP shares Taiwan Electronics is expected to generate 0.83 times more return on investment than Celxpert Energy. However, YuantaP shares Taiwan Electronics is 1.2 times less risky than Celxpert Energy. It trades about 0.07 of its potential returns per unit of risk. Celxpert Energy is currently generating about -0.03 per unit of risk. If you would invest  5,746  in YuantaP shares Taiwan Electronics on February 4, 2024 and sell it today you would earn a total of  2,744  from holding YuantaP shares Taiwan Electronics or generate 47.75% return on investment over 90 days.

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

YuantaP shares Taiwan Electron  vs.  Celxpert Energy

YuantaP shares Taiwan

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Electronics are ranked lower than 13 (%) 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.

Celxpert Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celxpert Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with YuantaP Shares and Celxpert Energy

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

The idea behind YuantaP shares Taiwan Electronics and Celxpert Energy 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.