Correlation Between ESUN Financial and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both ESUN Financial 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 ESUN Financial and CTBC Financial 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 CTBC Financial Holding, you can compare the effects of market volatilities on ESUN Financial 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 ESUN Financial with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and CTBC Financial.
Diversification Opportunities for ESUN Financial and CTBC Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESUN and CTBC is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding 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 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 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 ESUN Financial i.e., ESUN Financial and CTBC Financial go up and down completely randomly.
Pair Corralation between ESUN Financial and CTBC Financial
Assuming the 90 days trading horizon ESUN Financial is expected to generate 3.45 times less return on investment than CTBC Financial. But when comparing it to its historical volatility, ESUN Financial Holding is 1.02 times less risky than CTBC Financial. It trades about 0.06 of its potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 3,590 in CTBC Financial Holding on August 28, 2024 and sell it today you would earn a total of 145.00 from holding CTBC Financial Holding or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. CTBC Financial Holding
Performance |
| Timeline |
| ESUN Financial Holding |
| CTBC Financial Holding |
ESUN Financial and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and CTBC Financial
The main advantage of trading using opposite ESUN Financial and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial 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.| ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. CTBC Financial Holding | ESUN Financial vs. First Financial Holding | ESUN Financial vs. Fubon Financial Holding |
| CTBC Financial vs. Fubon Financial Holding | CTBC Financial vs. Cathay Financial Holding | CTBC Financial vs. Mega Financial Holding | CTBC Financial vs. First Financial Holding |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |