Correlation Between Eastern Media and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Eastern Media 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 Eastern Media and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Media International and CTBC Financial Holding, you can compare the effects of market volatilities on Eastern Media 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 Eastern Media with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Media and CTBC Financial.
Diversification Opportunities for Eastern Media and CTBC Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eastern and CTBC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Media International 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 Eastern Media 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 Eastern Media International 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 Eastern Media i.e., Eastern Media and CTBC Financial go up and down completely randomly.
Pair Corralation between Eastern Media and CTBC Financial
Assuming the 90 days trading horizon Eastern Media International is expected to generate 10.58 times more return on investment than CTBC Financial. However, Eastern Media is 10.58 times more volatile than CTBC Financial Holding. It trades about 0.0 of its potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.02 per unit of risk. If you would invest 2,160 in Eastern Media International on August 25, 2024 and sell it today you would lose (320.00) from holding Eastern Media International or give up 14.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Media International vs. CTBC Financial Holding
Performance |
| Timeline |
| Eastern Media Intern |
| CTBC Financial Holding |
Eastern Media and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Media and CTBC Financial
The main advantage of trading using opposite Eastern Media and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Media 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.| Eastern Media vs. Sunny Friend Environmental | Eastern Media vs. Taiwan Secom Co | Eastern Media vs. TTET Union Corp | Eastern Media vs. ECOVE Environment Corp |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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