Correlation Between EnTie Commercial and Bank of Kaohsiung
Can any of the company-specific risk be diversified away by investing in both EnTie Commercial and Bank of Kaohsiung 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 EnTie Commercial and Bank of Kaohsiung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnTie Commercial Bank and Bank of Kaohsiung, you can compare the effects of market volatilities on EnTie Commercial and Bank of Kaohsiung 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 EnTie Commercial with a short position of Bank of Kaohsiung. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnTie Commercial and Bank of Kaohsiung.
Diversification Opportunities for EnTie Commercial and Bank of Kaohsiung
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EnTie and Bank is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding EnTie Commercial Bank and Bank of Kaohsiung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Kaohsiung and EnTie Commercial 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 EnTie Commercial Bank are associated (or correlated) with Bank of Kaohsiung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Kaohsiung has no effect on the direction of EnTie Commercial i.e., EnTie Commercial and Bank of Kaohsiung go up and down completely randomly.
Pair Corralation between EnTie Commercial and Bank of Kaohsiung
Assuming the 90 days trading horizon EnTie Commercial Bank is expected to generate 1.31 times more return on investment than Bank of Kaohsiung. However, EnTie Commercial is 1.31 times more volatile than Bank of Kaohsiung. It trades about 0.01 of its potential returns per unit of risk. Bank of Kaohsiung is currently generating about -0.01 per unit of risk. If you would invest 1,470 in EnTie Commercial Bank on August 29, 2024 and sell it today you would earn a total of 0.00 from holding EnTie Commercial Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnTie Commercial Bank vs. Bank of Kaohsiung
Performance |
| Timeline |
| EnTie Commercial Bank |
| Bank of Kaohsiung |
EnTie Commercial and Bank of Kaohsiung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnTie Commercial and Bank of Kaohsiung
The main advantage of trading using opposite EnTie Commercial and Bank of Kaohsiung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnTie Commercial position performs unexpectedly, Bank of Kaohsiung 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 Bank of Kaohsiung will offset losses from the drop in Bank of Kaohsiung's long position.| EnTie Commercial vs. Taiwan Secom Co | EnTie Commercial vs. TTET Union Corp | EnTie Commercial vs. China Steel Chemical | EnTie Commercial vs. Taiwan Shin Kong |
| Bank of Kaohsiung vs. Taiwan Secom Co | Bank of Kaohsiung vs. TTET Union Corp | Bank of Kaohsiung vs. China Steel Chemical | Bank of Kaohsiung vs. Taiwan Shin Kong |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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