Correlation Between CTBC Financial and Leatec Fine
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Leatec Fine 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 Leatec Fine 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 Leatec Fine Ceramics, you can compare the effects of market volatilities on CTBC Financial and Leatec Fine 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 Leatec Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Leatec Fine.
Diversification Opportunities for CTBC Financial and Leatec Fine
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CTBC and Leatec is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics 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 Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of CTBC Financial i.e., CTBC Financial and Leatec Fine go up and down completely randomly.
Pair Corralation between CTBC Financial and Leatec Fine
Assuming the 90 days trading horizon CTBC Financial is expected to generate 30.14 times less return on investment than Leatec Fine. But when comparing it to its historical volatility, CTBC Financial Holding is 11.46 times less risky than Leatec Fine. It trades about 0.02 of its potential returns per unit of risk. Leatec Fine Ceramics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,755 in Leatec Fine Ceramics on August 24, 2024 and sell it today you would earn a total of 965.00 from holding Leatec Fine Ceramics or generate 54.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
CTBC Financial Holding vs. Leatec Fine Ceramics
Performance |
| Timeline |
| CTBC Financial Holding |
| Leatec Fine Ceramics |
CTBC Financial and Leatec Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Leatec Fine
The main advantage of trading using opposite CTBC Financial and Leatec Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Leatec Fine 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 Leatec Fine will offset losses from the drop in Leatec Fine'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 |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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