Correlation Between CTBC Financial and YCC Parts
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and YCC Parts 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 YCC Parts 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 YCC Parts MFG, you can compare the effects of market volatilities on CTBC Financial and YCC Parts 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 YCC Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and YCC Parts.
Diversification Opportunities for CTBC Financial and YCC Parts
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CTBC and YCC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and YCC Parts MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YCC Parts MFG 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 YCC Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YCC Parts MFG has no effect on the direction of CTBC Financial i.e., CTBC Financial and YCC Parts go up and down completely randomly.
Pair Corralation between CTBC Financial and YCC Parts
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.17 times more return on investment than YCC Parts. However, CTBC Financial Holding is 5.9 times less risky than YCC Parts. It trades about -0.02 of its potential returns per unit of risk. YCC Parts MFG is currently generating about -0.13 per unit of risk. If you would invest 5,688 in CTBC Financial Holding on September 1, 2024 and sell it today you would lose (48.00) from holding CTBC Financial Holding or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
CTBC Financial Holding vs. YCC Parts MFG
Performance |
| Timeline |
| CTBC Financial Holding |
| YCC Parts MFG |
CTBC Financial and YCC Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and YCC Parts
The main advantage of trading using opposite CTBC Financial and YCC Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, YCC Parts 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 YCC Parts will offset losses from the drop in YCC Parts' long position.| CTBC Financial vs. Cathay Financial Holding | CTBC Financial vs. Cathay Financial Holding | CTBC Financial vs. Fubon Financial Holding | CTBC Financial vs. Mercuries Life Insurance |
| YCC Parts vs. Chaintech Technology Corp | YCC Parts vs. AVerMedia Technologies | YCC Parts vs. Avision | YCC Parts vs. Clevo 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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