Correlation Between CTBC Financial and Lee Chi
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Lee Chi 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 Lee Chi 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 Lee Chi Enterprises, you can compare the effects of market volatilities on CTBC Financial and Lee Chi 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 Lee Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Lee Chi.
Diversification Opportunities for CTBC Financial and Lee Chi
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and Lee is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Lee Chi Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Chi Enterprises 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 Lee Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Chi Enterprises has no effect on the direction of CTBC Financial i.e., CTBC Financial and Lee Chi go up and down completely randomly.
Pair Corralation between CTBC Financial and Lee Chi
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.23 times more return on investment than Lee Chi. However, CTBC Financial Holding is 4.41 times less risky than Lee Chi. It trades about 0.03 of its potential returns per unit of risk. Lee Chi Enterprises is currently generating about -0.09 per unit of risk. If you would invest 6,010 in CTBC Financial Holding on September 1, 2024 and sell it today you would earn a total of 70.00 from holding CTBC Financial Holding or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
CTBC Financial Holding vs. Lee Chi Enterprises
Performance |
| Timeline |
| CTBC Financial Holding |
| Lee Chi Enterprises |
CTBC Financial and Lee Chi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Lee Chi
The main advantage of trading using opposite CTBC Financial and Lee Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Lee Chi 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 Lee Chi will offset losses from the drop in Lee Chi's long position.| CTBC Financial vs. Fubon Financial Holding | CTBC Financial vs. YuantaP shares Taiwan Mid Cap | CTBC Financial vs. YuantaP shares Taiwan Electronics | 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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