Correlation Between CTBC Financial and Asia Optical
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Asia Optical 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 Asia Optical 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 Asia Optical Co, you can compare the effects of market volatilities on CTBC Financial and Asia Optical 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 Asia Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Asia Optical.
Diversification Opportunities for CTBC Financial and Asia Optical
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTBC and Asia is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Asia Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Optical 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 Asia Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Optical has no effect on the direction of CTBC Financial i.e., CTBC Financial and Asia Optical go up and down completely randomly.
Pair Corralation between CTBC Financial and Asia Optical
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.38 times more return on investment than Asia Optical. However, CTBC Financial Holding is 2.65 times less risky than Asia Optical. It trades about 0.22 of its potential returns per unit of risk. Asia Optical Co is currently generating about 0.04 per unit of risk. If you would invest 3,585 in CTBC Financial Holding on August 30, 2024 and sell it today you would earn a total of 185.00 from holding CTBC Financial Holding or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. Asia Optical Co
Performance |
| Timeline |
| CTBC Financial Holding |
| Asia Optical |
CTBC Financial and Asia Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Asia Optical
The main advantage of trading using opposite CTBC Financial and Asia Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Asia Optical 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 Asia Optical will offset losses from the drop in Asia Optical's long position.| CTBC Financial vs. Taiwan Secom Co | CTBC Financial vs. TTET Union Corp | CTBC Financial vs. China Steel Chemical | CTBC Financial vs. Taiwan Shin Kong |
| Asia Optical vs. LARGAN Precision Co | Asia Optical vs. Novatek Microelectronics Corp | Asia Optical vs. Genius Electronic Optical | Asia Optical vs. Catcher Technology Co |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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