Correlation Between CTBC Financial and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Mercuries Life 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 Mercuries Life 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 Mercuries Life Insurance, you can compare the effects of market volatilities on CTBC Financial and Mercuries Life 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 Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Mercuries Life.
Diversification Opportunities for CTBC Financial and Mercuries Life
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and Mercuries is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance 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 Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of CTBC Financial i.e., CTBC Financial and Mercuries Life go up and down completely randomly.
Pair Corralation between CTBC Financial and Mercuries Life
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 1.38 times more return on investment than Mercuries Life. However, CTBC Financial is 1.38 times more volatile than Mercuries Life Insurance. It trades about 0.25 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about -0.06 per unit of risk. If you would invest 3,615 in CTBC Financial Holding on August 24, 2024 and sell it today you would earn a total of 190.00 from holding CTBC Financial Holding or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CTBC Financial Holding vs. Mercuries Life Insurance
Performance |
| Timeline |
| CTBC Financial Holding |
| Mercuries Life Insurance |
CTBC Financial and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Mercuries Life
The main advantage of trading using opposite CTBC Financial and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Mercuries Life 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 Mercuries Life will offset losses from the drop in Mercuries Life's long position.| CTBC Financial vs. Fubon Financial Holding | CTBC Financial vs. Cathay Financial Holding | CTBC Financial vs. ESUN Financial Holding |
| Mercuries Life vs. Fubon Financial Holding | Mercuries Life vs. Cathay Financial Holding | Mercuries Life vs. ESUN Financial Holding |
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 CEOs Directory module to screen CEOs from public companies around the world.
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