Correlation Between CTBC Financial and X Legend
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and X Legend 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 X Legend 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 X Legend Entertainment Co, you can compare the effects of market volatilities on CTBC Financial and X Legend 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 X Legend. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and X Legend.
Diversification Opportunities for CTBC Financial and X Legend
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CTBC and 4994 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and X Legend Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Legend Entertainment 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 X Legend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Legend Entertainment has no effect on the direction of CTBC Financial i.e., CTBC Financial and X Legend go up and down completely randomly.
Pair Corralation between CTBC Financial and X Legend
Assuming the 90 days trading horizon CTBC Financial is expected to generate 3.25 times less return on investment than X Legend. But when comparing it to its historical volatility, CTBC Financial Holding is 6.51 times less risky than X Legend. It trades about 0.26 of its potential returns per unit of risk. X Legend Entertainment Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 10,200 in X Legend Entertainment Co on September 12, 2024 and sell it today you would earn a total of 400.00 from holding X Legend Entertainment Co or generate 3.92% 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. X Legend Entertainment Co
Performance |
| Timeline |
| CTBC Financial Holding |
| X Legend Entertainment |
CTBC Financial and X Legend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and X Legend
The main advantage of trading using opposite CTBC Financial and X Legend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, X Legend 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 X Legend will offset losses from the drop in X Legend'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 |
| X Legend vs. Cheng Mei Materials | X Legend vs. Lemtech Holdings Co | X Legend vs. Chia Chang Co | X Legend vs. Ruentex Development 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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