Correlation Between CTBC Financial and Nankang Rubber
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Nankang Rubber 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 Nankang Rubber 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 Nankang Rubber Tire, you can compare the effects of market volatilities on CTBC Financial and Nankang Rubber 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 Nankang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Nankang Rubber.
Diversification Opportunities for CTBC Financial and Nankang Rubber
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CTBC and Nankang is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Nankang Rubber Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nankang Rubber Tire 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 Nankang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nankang Rubber Tire has no effect on the direction of CTBC Financial i.e., CTBC Financial and Nankang Rubber go up and down completely randomly.
Pair Corralation between CTBC Financial and Nankang Rubber
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.12 times more return on investment than Nankang Rubber. However, CTBC Financial Holding is 8.35 times less risky than Nankang Rubber. It trades about 0.1 of its potential returns per unit of risk. Nankang Rubber Tire is currently generating about 0.0 per unit of risk. If you would invest 5,610 in CTBC Financial Holding on August 31, 2024 and sell it today you would earn a total of 30.00 from holding CTBC Financial Holding or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. Nankang Rubber Tire
Performance |
| Timeline |
| CTBC Financial Holding |
| Nankang Rubber Tire |
CTBC Financial and Nankang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Nankang Rubber
The main advantage of trading using opposite CTBC Financial and Nankang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Nankang Rubber 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 Nankang Rubber will offset losses from the drop in Nankang Rubber's long position.| CTBC Financial vs. Alchip Technologies | CTBC Financial vs. United Radiant Technology | CTBC Financial vs. Microtips Technology | CTBC Financial vs. Sunnic Technology Merchandise |
| Nankang Rubber vs. Yulon Motor Co | Nankang Rubber vs. Federal Corp | Nankang Rubber vs. Kenda Rubber Industrial | Nankang Rubber vs. Taiwan Glass Ind |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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