Correlation Between Taishin Financial and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Taishin 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 Taishin 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 Taishin Financial Holding and CTBC Financial Holding, you can compare the effects of market volatilities on Taishin 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 Taishin Financial with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taishin Financial and CTBC Financial.
Diversification Opportunities for Taishin Financial and CTBC Financial
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Taishin and CTBC is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Taishin 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 Taishin 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 Taishin 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 Taishin Financial i.e., Taishin Financial and CTBC Financial go up and down completely randomly.
Pair Corralation between Taishin Financial and CTBC Financial
Assuming the 90 days trading horizon Taishin Financial is expected to generate 2.34 times less return on investment than CTBC Financial. But when comparing it to its historical volatility, Taishin Financial Holding is 1.26 times less risky than CTBC Financial. It trades about 0.05 of its potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,188 in CTBC Financial Holding on August 25, 2024 and sell it today you would earn a total of 1,587 from holding CTBC Financial Holding or generate 72.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taishin Financial Holding vs. CTBC Financial Holding
Performance |
| Timeline |
| Taishin Financial Holding |
| CTBC Financial Holding |
Taishin Financial and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taishin Financial and CTBC Financial
The main advantage of trading using opposite Taishin Financial and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taishin 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.| Taishin Financial vs. CTBC Financial Holding | Taishin Financial vs. First Financial Holding | Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. ESUN Financial Holding |
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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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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