Correlation Between Otsuka Information and Yuanta Futures

Can any of the company-specific risk be diversified away by investing in both Otsuka Information and Yuanta Futures 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 Otsuka Information and Yuanta Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Otsuka Information Technology and Yuanta Futures Co, you can compare the effects of market volatilities on Otsuka Information and Yuanta Futures 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 Otsuka Information with a short position of Yuanta Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otsuka Information and Yuanta Futures.

Diversification Opportunities for Otsuka Information and Yuanta Futures

0.63

Correlation Coefficient

Otsuka Information  Yuanta Futures

Poor diversification

The 3 months correlation between Otsuka and Yuanta is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Otsuka Information Technology and Yuanta Futures Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Futures and Otsuka Information 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 Otsuka Information Technology are associated (or correlated) with Yuanta Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Futures has no effect on the direction of Otsuka Information i.e., Otsuka Information and Yuanta Futures go up and down completely randomly.

Pair Corralation between Otsuka Information and Yuanta Futures

Assuming the 90 days trading horizon Otsuka Information is expected to generate 1.41 times less return on investment than Yuanta Futures. In addition to that, Otsuka Information is 1.45 times more volatile than Yuanta Futures Co. It trades about 0.07 of its total potential returns per unit of risk. Yuanta Futures Co is currently generating about 0.13 per unit of volatility. If you would invest  5,650  in Yuanta Futures Co on September 14, 2024 and sell it today you would earn a total of  3,250  from holding Yuanta Futures Co or generate 57.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.62%
Values	Daily Returns

Otsuka Information Technology  vs.  Yuanta Futures Co

Otsuka Information

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Otsuka Information Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Otsuka Information showed solid returns over the last few months and may actually be approaching a breakup point.

Yuanta Futures

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Futures Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yuanta Futures may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Otsuka Information and Yuanta Futures

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

The idea behind Otsuka Information Technology and Yuanta Futures Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .