Correlation Between CTBC Financial and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Tehmag Foods 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 Tehmag Foods 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 Tehmag Foods, you can compare the effects of market volatilities on CTBC Financial and Tehmag Foods 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 Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Tehmag Foods.
Diversification Opportunities for CTBC Financial and Tehmag Foods
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and Tehmag is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods 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 Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of CTBC Financial i.e., CTBC Financial and Tehmag Foods go up and down completely randomly.
Pair Corralation between CTBC Financial and Tehmag Foods
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 2.41 times more return on investment than Tehmag Foods. However, CTBC Financial is 2.41 times more volatile than Tehmag Foods. It trades about 0.1 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.06 per unit of risk. If you would invest 2,740 in CTBC Financial Holding on September 4, 2024 and sell it today you would earn a total of 1,120 from holding CTBC Financial Holding or generate 40.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. Tehmag Foods
Performance |
| Timeline |
| CTBC Financial Holding |
| Tehmag Foods |
CTBC Financial and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Tehmag Foods
The main advantage of trading using opposite CTBC Financial and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| CTBC Financial vs. Central Reinsurance Corp | CTBC Financial vs. Huaku Development Co | CTBC Financial vs. Chailease Holding Co |
| Tehmag Foods vs. Uni President Enterprises Corp | Tehmag Foods vs. Lien Hwa Industrial | Tehmag Foods vs. Great Wall Enterprise | Tehmag Foods vs. Standard Foods 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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