Correlation Between CTBC Financial and Info Tek
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Info Tek 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 Info Tek 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 Info Tek, you can compare the effects of market volatilities on CTBC Financial and Info Tek 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 Info Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Info Tek.
Diversification Opportunities for CTBC Financial and Info Tek
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CTBC and Info is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Info Tek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Info Tek 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 Info Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Info Tek has no effect on the direction of CTBC Financial i.e., CTBC Financial and Info Tek go up and down completely randomly.
Pair Corralation between CTBC Financial and Info Tek
Assuming the 90 days trading horizon CTBC Financial is expected to generate 1.76 times less return on investment than Info Tek. But when comparing it to its historical volatility, CTBC Financial Holding is 1.64 times less risky than Info Tek. It trades about 0.05 of its potential returns per unit of risk. Info Tek is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,995 in Info Tek on October 9, 2024 and sell it today you would earn a total of 60.00 from holding Info Tek or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. Info Tek
Performance |
| Timeline |
| CTBC Financial Holding |
| Info Tek |
CTBC Financial and Info Tek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Info Tek
The main advantage of trading using opposite CTBC Financial and Info Tek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Info Tek 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 Info Tek will offset losses from the drop in Info Tek'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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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