Correlation Between CTBC Financial and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and YuantaP Shares 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 YuantaP Shares 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 YuantaP shares Taiwan Electronics, you can compare the effects of market volatilities on CTBC Financial and YuantaP Shares 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 YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and YuantaP Shares.
Diversification Opportunities for CTBC Financial and YuantaP Shares
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CTBC and YuantaP is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and YuantaP shares Taiwan Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan 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 YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of CTBC Financial i.e., CTBC Financial and YuantaP Shares go up and down completely randomly.
Pair Corralation between CTBC Financial and YuantaP Shares
Assuming the 90 days trading horizon CTBC Financial is expected to generate 2.26 times less return on investment than YuantaP Shares. But when comparing it to its historical volatility, CTBC Financial Holding is 14.49 times less risky than YuantaP Shares. It trades about 0.13 of its potential returns per unit of risk. YuantaP shares Taiwan Electronics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,710 in YuantaP shares Taiwan Electronics on September 3, 2024 and sell it today you would earn a total of 120.00 from holding YuantaP shares Taiwan Electronics or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. YuantaP shares Taiwan Electron
Performance |
| Timeline |
| CTBC Financial Holding |
| YuantaP shares Taiwan |
CTBC Financial and YuantaP Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and YuantaP Shares
The main advantage of trading using opposite CTBC Financial and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, YuantaP Shares 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 YuantaP Shares will offset losses from the drop in YuantaP Shares' long position.| CTBC Financial vs. YuantaP shares Taiwan Electronics | CTBC Financial vs. YuantaP shares Taiwan Mid Cap | CTBC Financial vs. Fubon MSCI Taiwan | CTBC Financial vs. YuantaP shares Taiwan Top |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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