Correlation Between CTBC Financial and Farglory FTZ
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Farglory FTZ 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 Farglory FTZ 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 Farglory FTZ Investment, you can compare the effects of market volatilities on CTBC Financial and Farglory FTZ 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 Farglory FTZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Farglory FTZ.
Diversification Opportunities for CTBC Financial and Farglory FTZ
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTBC and Farglory is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Farglory FTZ Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory FTZ Investment 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 Farglory FTZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory FTZ Investment has no effect on the direction of CTBC Financial i.e., CTBC Financial and Farglory FTZ go up and down completely randomly.
Pair Corralation between CTBC Financial and Farglory FTZ
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.14 times more return on investment than Farglory FTZ. However, CTBC Financial Holding is 7.08 times less risky than Farglory FTZ. It trades about 0.04 of its potential returns per unit of risk. Farglory FTZ Investment is currently generating about -0.02 per unit of risk. If you would invest 5,960 in CTBC Financial Holding on October 25, 2024 and sell it today you would earn a total of 320.00 from holding CTBC Financial Holding or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. Farglory FTZ Investment
Performance |
| Timeline |
| CTBC Financial Holding |
| Farglory FTZ Investment |
CTBC Financial and Farglory FTZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Farglory FTZ
The main advantage of trading using opposite CTBC Financial and Farglory FTZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Farglory FTZ 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 Farglory FTZ will offset losses from the drop in Farglory FTZ's long position.| CTBC Financial vs. Da Cin Construction Co | CTBC Financial vs. New Asia Construction | CTBC Financial vs. Tainet Communication System | CTBC Financial vs. Ruentex Engineering Construction |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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