Correlation Between CTBC Financial and Tsann Kuen
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Tsann Kuen 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 Tsann Kuen 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 Tsann Kuen Enterprise, you can compare the effects of market volatilities on CTBC Financial and Tsann Kuen 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 Tsann Kuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Tsann Kuen.
Diversification Opportunities for CTBC Financial and Tsann Kuen
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTBC and Tsann is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Tsann Kuen Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsann Kuen Enterprise 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 Tsann Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsann Kuen Enterprise has no effect on the direction of CTBC Financial i.e., CTBC Financial and Tsann Kuen go up and down completely randomly.
Pair Corralation between CTBC Financial and Tsann Kuen
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 2.31 times more return on investment than Tsann Kuen. However, CTBC Financial is 2.31 times more volatile than Tsann Kuen Enterprise. It trades about 0.31 of its potential returns per unit of risk. Tsann Kuen Enterprise is currently generating about 0.05 per unit of risk. If you would invest 3,900 in CTBC Financial Holding on November 28, 2024 and sell it today you would earn a total of 165.00 from holding CTBC Financial Holding or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
CTBC Financial Holding vs. Tsann Kuen Enterprise
Performance |
| Timeline |
| CTBC Financial Holding |
| Tsann Kuen Enterprise |
CTBC Financial and Tsann Kuen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Tsann Kuen
The main advantage of trading using opposite CTBC Financial and Tsann Kuen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Tsann Kuen 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 Tsann Kuen will offset losses from the drop in Tsann Kuen's long position.| CTBC Financial vs. Fubon Financial Holding | CTBC Financial vs. Cathay Financial Holding | CTBC Financial vs. Mega Financial Holding | CTBC Financial vs. First 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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