Correlation Between Fulin Plastic and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Fulin Plastic and CTBC Financial 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 Fulin Plastic and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulin Plastic Industry and CTBC Financial Holding, you can compare the effects of market volatilities on Fulin Plastic and CTBC Financial 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 Fulin Plastic with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulin Plastic and CTBC Financial.
Diversification Opportunities for Fulin Plastic and CTBC Financial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fulin and CTBC is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fulin Plastic Industry and CTBC Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC Financial Holding and Fulin Plastic 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 Fulin Plastic Industry are associated (or correlated) with CTBC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC Financial Holding has no effect on the direction of Fulin Plastic i.e., Fulin Plastic and CTBC Financial go up and down completely randomly.
Pair Corralation between Fulin Plastic and CTBC Financial
Assuming the 90 days trading horizon Fulin Plastic is expected to generate 2.23 times less return on investment than CTBC Financial. In addition to that, Fulin Plastic is 2.57 times more volatile than CTBC Financial Holding. It trades about 0.01 of its total potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.04 per unit of volatility. If you would invest 5,960 in CTBC Financial Holding on October 7, 2024 and sell it today you would earn a total of 300.00 from holding CTBC Financial Holding or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Fulin Plastic Industry vs. CTBC Financial Holding
Performance |
| Timeline |
| Fulin Plastic Industry |
| CTBC Financial Holding |
Fulin Plastic and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulin Plastic and CTBC Financial
The main advantage of trading using opposite Fulin Plastic and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulin Plastic position performs unexpectedly, CTBC Financial 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 Financial will offset losses from the drop in CTBC Financial's long position.| Fulin Plastic vs. Far Eastern New | Fulin Plastic vs. Eclat Textile Co | Fulin Plastic vs. Ruentex Industries | Fulin Plastic vs. Formosa Taffeta Co |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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