Correlation Between CTBC Financial and Kings Town
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Kings Town 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 Kings Town 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 Kings Town Bank, you can compare the effects of market volatilities on CTBC Financial and Kings Town 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 Kings Town. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Kings Town.
Diversification Opportunities for CTBC Financial and Kings Town
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTBC and Kings is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Kings Town Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kings Town Bank 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 Kings Town. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kings Town Bank has no effect on the direction of CTBC Financial i.e., CTBC Financial and Kings Town go up and down completely randomly.
Pair Corralation between CTBC Financial and Kings Town
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.66 times more return on investment than Kings Town. However, CTBC Financial Holding is 1.51 times less risky than Kings Town. It trades about 0.18 of its potential returns per unit of risk. Kings Town Bank is currently generating about -0.05 per unit of risk. If you would invest 3,590 in CTBC Financial Holding on September 1, 2024 and sell it today you would earn a total of 150.00 from holding CTBC Financial Holding or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. Kings Town Bank
Performance |
| Timeline |
| CTBC Financial Holding |
| Kings Town Bank |
CTBC Financial and Kings Town Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Kings Town
The main advantage of trading using opposite CTBC Financial and Kings Town positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Kings Town 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 Kings Town will offset losses from the drop in Kings Town's long position.| CTBC Financial vs. Central Reinsurance Corp | CTBC Financial vs. Huaku Development Co | CTBC Financial vs. Fubon Financial Holding |
| Kings Town vs. Taichung Commercial Bank | Kings Town vs. Far Eastern International | Kings Town vs. Taiwan Business Bank | Kings Town vs. Sinopac Financial Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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