Correlation Between Fuh Hwa and CTBC USD
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By analyzing existing cross correlation between Fuh Hwa Emerging and CTBC USD Corporate, you can compare the effects of market volatilities on Fuh Hwa and CTBC USD 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 Fuh Hwa with a short position of CTBC USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuh Hwa and CTBC USD.
Diversification Opportunities for Fuh Hwa and CTBC USD
Almost no diversification
The 3 months correlation between Fuh and CTBC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fuh Hwa Emerging and CTBC USD Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC USD Corporate and Fuh Hwa 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 Fuh Hwa Emerging are associated (or correlated) with CTBC USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC USD Corporate has no effect on the direction of Fuh Hwa i.e., Fuh Hwa and CTBC USD go up and down completely randomly.
Pair Corralation between Fuh Hwa and CTBC USD
Assuming the 90 days trading horizon Fuh Hwa is expected to generate 1.25 times less return on investment than CTBC USD. But when comparing it to its historical volatility, Fuh Hwa Emerging is 1.18 times less risky than CTBC USD. It trades about 0.17 of its potential returns per unit of risk. CTBC USD Corporate is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,548 in CTBC USD Corporate on August 31, 2024 and sell it today you would earn a total of 81.00 from holding CTBC USD Corporate or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuh Hwa Emerging vs. CTBC USD Corporate
Performance |
| Timeline |
| Fuh Hwa Emerging |
| CTBC USD Corporate |
Fuh Hwa and CTBC USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuh Hwa and CTBC USD
The main advantage of trading using opposite Fuh Hwa and CTBC USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuh Hwa position performs unexpectedly, CTBC USD 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 CTBC USD will offset losses from the drop in CTBC USD's long position.The idea behind Fuh Hwa Emerging and CTBC USD Corporate 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.| CTBC USD vs. Yuanta Daily Taiwan | CTBC USD vs. Cathay Taiwan 5G | CTBC USD vs. Yuanta Daily CSI | CTBC USD vs. Fubon FTSE Vietnam |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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