Correlation Between Yuanta Financial and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Yuanta 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 Yuanta 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 Yuanta Financial Holdings and CTBC Financial Holding, you can compare the effects of market volatilities on Yuanta 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 Yuanta Financial with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta Financial and CTBC Financial.
Diversification Opportunities for Yuanta Financial and CTBC Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yuanta and CTBC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Financial Holdings 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 Yuanta 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 Yuanta Financial Holdings 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 Yuanta Financial i.e., Yuanta Financial and CTBC Financial go up and down completely randomly.
Pair Corralation between Yuanta Financial and CTBC Financial
Assuming the 90 days trading horizon Yuanta Financial is expected to generate 2.57 times less return on investment than CTBC Financial. In addition to that, Yuanta Financial is 1.15 times more volatile than CTBC Financial Holding. It trades about 0.09 of its total potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.26 per unit of volatility. If you would invest 3,590 in CTBC Financial Holding on August 28, 2024 and sell it today you would earn a total of 210.00 from holding CTBC Financial Holding or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuanta Financial Holdings vs. CTBC Financial Holding
Performance |
| Timeline |
| Yuanta Financial Holdings |
| CTBC Financial Holding |
Yuanta Financial and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuanta Financial and CTBC Financial
The main advantage of trading using opposite Yuanta Financial and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanta 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.| Yuanta Financial vs. CTBC Financial Holding | Yuanta Financial vs. Fubon Financial Holding | Yuanta Financial vs. Cathay Financial Holding | Yuanta Financial vs. Mega 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |