Correlation Between CTBC Financial and Lucky Cement
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Lucky Cement 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 CTBC Financial and Lucky Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTBC Financial Holding and Lucky Cement Co, you can compare the effects of market volatilities on CTBC Financial and Lucky Cement 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 CTBC Financial with a short position of Lucky Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Lucky Cement.
Diversification Opportunities for CTBC Financial and Lucky Cement
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTBC and Lucky is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Lucky Cement Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucky Cement and CTBC 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 CTBC Financial Holding are associated (or correlated) with Lucky Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucky Cement has no effect on the direction of CTBC Financial i.e., CTBC Financial and Lucky Cement go up and down completely randomly.
Pair Corralation between CTBC Financial and Lucky Cement
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 1.32 times more return on investment than Lucky Cement. However, CTBC Financial is 1.32 times more volatile than Lucky Cement Co. It trades about 0.02 of its potential returns per unit of risk. Lucky Cement Co is currently generating about -0.1 per unit of risk. If you would invest 3,640 in CTBC Financial Holding on September 1, 2024 and sell it today you would earn a total of 100.00 from holding CTBC Financial Holding or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
CTBC Financial Holding vs. Lucky Cement Co
Performance |
| Timeline |
| CTBC Financial Holding |
| Lucky Cement |
CTBC Financial and Lucky Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Lucky Cement
The main advantage of trading using opposite CTBC Financial and Lucky Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Lucky Cement 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 Lucky Cement will offset losses from the drop in Lucky Cement's long position.| CTBC Financial vs. Central Reinsurance Corp | CTBC Financial vs. Huaku Development Co | CTBC Financial vs. Fubon Financial Holding |
| Lucky Cement vs. Universal Cement Corp | Lucky Cement vs. Chia Hsin Cement | Lucky Cement vs. Hsing Ta Cement | Lucky Cement vs. Asia Cement Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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