Correlation Between CTBC Financial and Kee Tai
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Kee Tai 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 Kee Tai 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 Kee Tai Properties, you can compare the effects of market volatilities on CTBC Financial and Kee Tai 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 Kee Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Kee Tai.
Diversification Opportunities for CTBC Financial and Kee Tai
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and Kee is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Kee Tai Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kee Tai Properties 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 Kee Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kee Tai Properties has no effect on the direction of CTBC Financial i.e., CTBC Financial and Kee Tai go up and down completely randomly.
Pair Corralation between CTBC Financial and Kee Tai
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.12 times more return on investment than Kee Tai. However, CTBC Financial Holding is 8.03 times less risky than Kee Tai. It trades about 0.21 of its potential returns per unit of risk. Kee Tai Properties is currently generating about -0.23 per unit of risk. If you would invest 6,080 in CTBC Financial Holding on September 19, 2024 and sell it today you would earn a total of 40.00 from holding CTBC Financial Holding or generate 0.66% 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. Kee Tai Properties
Performance |
| Timeline |
| CTBC Financial Holding |
| Kee Tai Properties |
CTBC Financial and Kee Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Kee Tai
The main advantage of trading using opposite CTBC Financial and Kee Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Kee Tai 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 Kee Tai will offset losses from the drop in Kee Tai'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. Fubon MSCI Taiwan |
| Kee Tai vs. Hung Sheng Construction | Kee Tai vs. Chainqui Construction Development | Kee Tai vs. BES Engineering Co | Kee Tai vs. Long Bon International |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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