Correlation Between Cathay Taiwan and CTCI Corp
Can any of the company-specific risk be diversified away by investing in both Cathay Taiwan and CTCI Corp 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 Cathay Taiwan and CTCI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Taiwan 5G and CTCI Corp, you can compare the effects of market volatilities on Cathay Taiwan and CTCI Corp 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 Cathay Taiwan with a short position of CTCI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Taiwan and CTCI Corp.
Diversification Opportunities for Cathay Taiwan and CTCI Corp
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and CTCI is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Taiwan 5G and CTCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTCI Corp and Cathay Taiwan 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 Cathay Taiwan 5G are associated (or correlated) with CTCI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTCI Corp has no effect on the direction of Cathay Taiwan i.e., Cathay Taiwan and CTCI Corp go up and down completely randomly.
Pair Corralation between Cathay Taiwan and CTCI Corp
Assuming the 90 days trading horizon Cathay Taiwan 5G is expected to generate 1.3 times more return on investment than CTCI Corp. However, Cathay Taiwan is 1.3 times more volatile than CTCI Corp. It trades about -0.02 of its potential returns per unit of risk. CTCI Corp is currently generating about -0.11 per unit of risk. If you would invest 2,469 in Cathay Taiwan 5G on September 13, 2024 and sell it today you would lose (14.00) from holding Cathay Taiwan 5G or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Taiwan 5G vs. CTCI Corp
Performance |
| Timeline |
| Cathay Taiwan 5G |
| CTCI Corp |
Cathay Taiwan and CTCI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Taiwan and CTCI Corp
The main advantage of trading using opposite Cathay Taiwan and CTCI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Taiwan position performs unexpectedly, CTCI Corp 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 CTCI Corp will offset losses from the drop in CTCI Corp's long position.| Cathay Taiwan vs. YuantaP shares Taiwan Top | Cathay Taiwan vs. Yuanta Daily Taiwan | Cathay Taiwan vs. Yuanta Daily CSI | Cathay Taiwan vs. Cathay Sustainability High |
| CTCI Corp vs. Taiwan Secom Co | CTCI Corp vs. Pou Chen Corp | CTCI Corp vs. Formosa Petrochemical Corp | CTCI Corp vs. Cheng Shin Rubber |
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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