Correlation Between ESUN Financial and EnTie Commercial
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and EnTie Commercial 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 ESUN Financial and EnTie Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESUN Financial Holding and EnTie Commercial Bank, you can compare the effects of market volatilities on ESUN Financial and EnTie Commercial 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 ESUN Financial with a short position of EnTie Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and EnTie Commercial.
Diversification Opportunities for ESUN Financial and EnTie Commercial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ESUN and EnTie is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and EnTie Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnTie Commercial Bank and ESUN Financial 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 ESUN Financial Holding are associated (or correlated) with EnTie Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnTie Commercial Bank has no effect on the direction of ESUN Financial i.e., ESUN Financial and EnTie Commercial go up and down completely randomly.
Pair Corralation between ESUN Financial and EnTie Commercial
Assuming the 90 days trading horizon ESUN Financial is expected to generate 12.78 times less return on investment than EnTie Commercial. But when comparing it to its historical volatility, ESUN Financial Holding is 1.61 times less risky than EnTie Commercial. It trades about 0.0 of its potential returns per unit of risk. EnTie Commercial Bank is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,500 in EnTie Commercial Bank on August 28, 2024 and sell it today you would earn a total of 10.00 from holding EnTie Commercial Bank or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. EnTie Commercial Bank
Performance |
| Timeline |
| ESUN Financial Holding |
| EnTie Commercial Bank |
ESUN Financial and EnTie Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and EnTie Commercial
The main advantage of trading using opposite ESUN Financial and EnTie Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, EnTie Commercial 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 EnTie Commercial will offset losses from the drop in EnTie Commercial's long position.| ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. CTBC Financial Holding | ESUN Financial vs. First Financial Holding | ESUN Financial vs. Fubon Financial Holding |
| EnTie Commercial vs. Union Bank of | EnTie Commercial vs. Bank of Kaohsiung | EnTie Commercial vs. Taiwan Business Bank | EnTie Commercial vs. Chang Hwa Commercial |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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