Correlation Between CTBC Financial and Tachan Securities
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Tachan Securities 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 Tachan Securities 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 Tachan Securities Co, you can compare the effects of market volatilities on CTBC Financial and Tachan Securities 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 Tachan Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Tachan Securities.
Diversification Opportunities for CTBC Financial and Tachan Securities
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and Tachan is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Tachan Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tachan Securities 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 Tachan Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tachan Securities has no effect on the direction of CTBC Financial i.e., CTBC Financial and Tachan Securities go up and down completely randomly.
Pair Corralation between CTBC Financial and Tachan Securities
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.13 times more return on investment than Tachan Securities. However, CTBC Financial Holding is 7.85 times less risky than Tachan Securities. It trades about 0.2 of its potential returns per unit of risk. Tachan Securities Co is currently generating about 0.03 per unit of risk. If you would invest 6,260 in CTBC Financial Holding on November 2, 2024 and sell it today you would earn a total of 20.00 from holding CTBC Financial Holding or generate 0.32% 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. Tachan Securities Co
Performance |
| Timeline |
| CTBC Financial Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
| Tachan Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CTBC Financial and Tachan Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Tachan Securities
The main advantage of trading using opposite CTBC Financial and Tachan Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Tachan Securities 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 Tachan Securities will offset losses from the drop in Tachan Securities' long position.The idea behind CTBC Financial Holding and Tachan Securities Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |