Correlation Between CTBC Financial and DV Biomed
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and DV Biomed 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 DV Biomed 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 DV Biomed Co, you can compare the effects of market volatilities on CTBC Financial and DV Biomed 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 DV Biomed. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and DV Biomed.
Diversification Opportunities for CTBC Financial and DV Biomed
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTBC and 6539 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and DV Biomed Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DV Biomed 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 DV Biomed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DV Biomed has no effect on the direction of CTBC Financial i.e., CTBC Financial and DV Biomed go up and down completely randomly.
Pair Corralation between CTBC Financial and DV Biomed
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 1.46 times more return on investment than DV Biomed. However, CTBC Financial is 1.46 times more volatile than DV Biomed Co. It trades about 0.18 of its potential returns per unit of risk. DV Biomed Co is currently generating about -0.2 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 | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CTBC Financial Holding vs. DV Biomed Co
Performance |
| Timeline |
| CTBC Financial Holding |
| DV Biomed |
CTBC Financial and DV Biomed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and DV Biomed
The main advantage of trading using opposite CTBC Financial and DV Biomed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, DV Biomed 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 DV Biomed will offset losses from the drop in DV Biomed's long position.| CTBC Financial vs. Central Reinsurance Corp | CTBC Financial vs. Huaku Development Co | CTBC Financial vs. Fubon Financial Holding |
| DV Biomed vs. Yieh United Steel | DV Biomed vs. Ever Clear Environmental Eng | DV Biomed vs. Mayer Steel Pipe | DV Biomed vs. Sheng Yu Steel |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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