Correlation Between CTBC Financial and EMemory Technology
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and EMemory Technology 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 EMemory Technology 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 eMemory Technology, you can compare the effects of market volatilities on CTBC Financial and EMemory Technology 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 EMemory Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and EMemory Technology.
Diversification Opportunities for CTBC Financial and EMemory Technology
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTBC and EMemory is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and eMemory Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMemory Technology 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 EMemory Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMemory Technology has no effect on the direction of CTBC Financial i.e., CTBC Financial and EMemory Technology go up and down completely randomly.
Pair Corralation between CTBC Financial and EMemory Technology
Assuming the 90 days trading horizon CTBC Financial is expected to generate 41.69 times less return on investment than EMemory Technology. But when comparing it to its historical volatility, CTBC Financial Holding is 14.07 times less risky than EMemory Technology. It trades about 0.02 of its potential returns per unit of risk. eMemory Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 145,550 in eMemory Technology on August 26, 2024 and sell it today you would earn a total of 154,450 from holding eMemory Technology or generate 106.11% 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. eMemory Technology
Performance |
| Timeline |
| CTBC Financial Holding |
| eMemory Technology |
CTBC Financial and EMemory Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and EMemory Technology
The main advantage of trading using opposite CTBC Financial and EMemory Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, EMemory Technology 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 EMemory Technology will offset losses from the drop in EMemory Technology'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 |
| EMemory Technology vs. Global Unichip Corp | EMemory Technology vs. Asmedia Technology | EMemory Technology vs. Unimicron Technology Corp | EMemory Technology vs. Novatek Microelectronics Corp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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