Correlation Between Da Cin and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Da Cin 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 Da Cin and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Da Cin Construction Co and CTBC Financial Holding, you can compare the effects of market volatilities on Da Cin 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 Da Cin with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Cin and CTBC Financial.
Diversification Opportunities for Da Cin and CTBC Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2535 and CTBC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Da Cin Construction Co 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 Da Cin 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 Da Cin Construction Co 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 Da Cin i.e., Da Cin and CTBC Financial go up and down completely randomly.
Pair Corralation between Da Cin and CTBC Financial
Assuming the 90 days trading horizon Da Cin Construction Co is expected to generate 6.81 times more return on investment than CTBC Financial. However, Da Cin is 6.81 times more volatile than CTBC Financial Holding. It trades about 0.17 of its potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.38 per unit of risk. If you would invest 4,975 in Da Cin Construction Co on October 26, 2024 and sell it today you would earn a total of 525.00 from holding Da Cin Construction Co or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Da Cin Construction Co vs. CTBC Financial Holding
Performance |
| Timeline |
| Da Cin Construction |
| CTBC Financial Holding |
Da Cin and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Da Cin and CTBC Financial
The main advantage of trading using opposite Da Cin and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Da Cin 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.| Da Cin vs. Huaku Development Co | Da Cin vs. Highwealth Construction Corp | Da Cin vs. Kindom Construction Corp | Da Cin vs. Kedge Construction Co |
| CTBC Financial vs. Da Cin Construction Co | CTBC Financial vs. New Asia Construction | CTBC Financial vs. Tainet Communication System | CTBC Financial vs. Ruentex Engineering Construction |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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