Correlation Between CTBC Financial and MPI
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and MPI 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 MPI 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 MPI Corporation, you can compare the effects of market volatilities on CTBC Financial and MPI 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 MPI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and MPI.
Diversification Opportunities for CTBC Financial and MPI
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CTBC and MPI is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and MPI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPI Corporation 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 MPI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPI Corporation has no effect on the direction of CTBC Financial i.e., CTBC Financial and MPI go up and down completely randomly.
Pair Corralation between CTBC Financial and MPI
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.07 times more return on investment than MPI. However, CTBC Financial Holding is 15.1 times less risky than MPI. It trades about 0.1 of its potential returns per unit of risk. MPI Corporation is currently generating about 0.0 per unit of risk. If you would invest 5,610 in CTBC Financial Holding on September 2, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTBC Financial Holding vs. MPI Corp.
Performance |
| Timeline |
| CTBC Financial Holding |
| MPI Corporation |
CTBC Financial and MPI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and MPI
The main advantage of trading using opposite CTBC Financial and MPI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, MPI 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 MPI will offset losses from the drop in MPI'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 |
| MPI vs. Sino American Silicon Products | MPI vs. Powertech Technology | MPI vs. Formosa Sumco Technology | MPI vs. Radiant Opto Electronics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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