Correlation Between CTBC Financial and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and ABC Taiwan 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 ABC Taiwan 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 ABC Taiwan Electronics, you can compare the effects of market volatilities on CTBC Financial and ABC Taiwan 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 ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and ABC Taiwan.
Diversification Opportunities for CTBC Financial and ABC Taiwan
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and ABC is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan Electronics 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 ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of CTBC Financial i.e., CTBC Financial and ABC Taiwan go up and down completely randomly.
Pair Corralation between CTBC Financial and ABC Taiwan
Assuming the 90 days trading horizon CTBC Financial Holding is expected to under-perform the ABC Taiwan. But the stock apears to be less risky and, when comparing its historical volatility, CTBC Financial Holding is 6.46 times less risky than ABC Taiwan. The stock trades about -0.02 of its potential returns per unit of risk. The ABC Taiwan Electronics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,190 in ABC Taiwan Electronics on September 1, 2024 and sell it today you would earn a total of 105.00 from holding ABC Taiwan Electronics or generate 4.79% 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. ABC Taiwan Electronics
Performance |
| Timeline |
| CTBC Financial Holding |
| ABC Taiwan Electronics |
CTBC Financial and ABC Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and ABC Taiwan
The main advantage of trading using opposite CTBC Financial and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, ABC Taiwan 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 ABC Taiwan will offset losses from the drop in ABC Taiwan's 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 |
| ABC Taiwan vs. Chinese Maritime Transport | ABC Taiwan vs. Founding Construction Development | ABC Taiwan vs. Dawushan Farm Tech | ABC Taiwan vs. Chung Hsin Electric Machinery |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |