Correlation Between CTBC Financial and Everlight Chemical
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Everlight Chemical 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 Everlight Chemical 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 Everlight Chemical Industrial, you can compare the effects of market volatilities on CTBC Financial and Everlight Chemical 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 Everlight Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Everlight Chemical.
Diversification Opportunities for CTBC Financial and Everlight Chemical
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and Everlight is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Everlight Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Chemical 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 Everlight Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Chemical has no effect on the direction of CTBC Financial i.e., CTBC Financial and Everlight Chemical go up and down completely randomly.
Pair Corralation between CTBC Financial and Everlight Chemical
Assuming the 90 days trading horizon CTBC Financial is expected to generate 3.78 times less return on investment than Everlight Chemical. But when comparing it to its historical volatility, CTBC Financial Holding is 6.79 times less risky than Everlight Chemical. It trades about 0.04 of its potential returns per unit of risk. Everlight Chemical Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,865 in Everlight Chemical Industrial on October 21, 2024 and sell it today you would earn a total of 240.00 from holding Everlight Chemical Industrial or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. Everlight Chemical Industrial
Performance |
| Timeline |
| CTBC Financial Holding |
| Everlight Chemical |
CTBC Financial and Everlight Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Everlight Chemical
The main advantage of trading using opposite CTBC Financial and Everlight Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Everlight Chemical 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 Everlight Chemical will offset losses from the drop in Everlight Chemical's long position.| CTBC Financial vs. Unique Optical Industrial | CTBC Financial vs. Wha Yu Industrial | CTBC Financial vs. Nankang Rubber Tire | CTBC Financial vs. Shih Kuen Plastics |
| Everlight Chemical vs. Oriental Union Chemical | Everlight Chemical vs. Ho Tung Chemical | Everlight Chemical vs. China Man Made Fiber | Everlight Chemical vs. Sunko Ink 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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