Correlation Between Hotel Holiday and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Hotel Holiday 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 Hotel Holiday and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Holiday Garden and CTBC Financial Holding, you can compare the effects of market volatilities on Hotel Holiday 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 Hotel Holiday with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Holiday and CTBC Financial.
Diversification Opportunities for Hotel Holiday and CTBC Financial
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hotel and CTBC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Holiday Garden 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 Hotel Holiday 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 Hotel Holiday Garden 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 Hotel Holiday i.e., Hotel Holiday and CTBC Financial go up and down completely randomly.
Pair Corralation between Hotel Holiday and CTBC Financial
Assuming the 90 days trading horizon Hotel Holiday Garden is expected to under-perform the CTBC Financial. In addition to that, Hotel Holiday is 5.4 times more volatile than CTBC Financial Holding. It trades about -0.05 of its total potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.03 per unit of volatility. If you would invest 6,010 in CTBC Financial Holding on November 29, 2024 and sell it today you would earn a total of 290.00 from holding CTBC Financial Holding or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Hotel Holiday Garden vs. CTBC Financial Holding
Performance |
| Timeline |
| Hotel Holiday Garden |
| CTBC Financial Holding |
Hotel Holiday and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Holiday and CTBC Financial
The main advantage of trading using opposite Hotel Holiday and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Holiday 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.| Hotel Holiday vs. First Hotel Co | Hotel Holiday vs. Leofoo Development Co | Hotel Holiday vs. Taiwan Tea Corp | Hotel Holiday vs. China Container Terminal |
| CTBC Financial vs. Shian Yih Electronic | CTBC Financial vs. Elan Microelectronics Corp | CTBC Financial vs. Harmony Electronics | CTBC Financial vs. WT Microelectronics Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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