Correlation Between CTBC Financial and Galaxy Software
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Galaxy Software 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 Galaxy Software 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 Galaxy Software Services, you can compare the effects of market volatilities on CTBC Financial and Galaxy Software 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 Galaxy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Galaxy Software.
Diversification Opportunities for CTBC Financial and Galaxy Software
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CTBC and Galaxy is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Galaxy Software Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Software Services 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 Galaxy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Software Services has no effect on the direction of CTBC Financial i.e., CTBC Financial and Galaxy Software go up and down completely randomly.
Pair Corralation between CTBC Financial and Galaxy Software
Assuming the 90 days trading horizon CTBC Financial is expected to generate 408.11 times less return on investment than Galaxy Software. But when comparing it to its historical volatility, CTBC Financial Holding is 208.52 times less risky than Galaxy Software. It trades about 0.02 of its potential returns per unit of risk. Galaxy Software Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,949 in Galaxy Software Services on September 12, 2024 and sell it today you would earn a total of 9,601 from holding Galaxy Software Services or generate 194.0% 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. Galaxy Software Services
Performance |
| Timeline |
| CTBC Financial Holding |
| Galaxy Software Services |
CTBC Financial and Galaxy Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and Galaxy Software
The main advantage of trading using opposite CTBC Financial and Galaxy Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Galaxy Software 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 Galaxy Software will offset losses from the drop in Galaxy Software'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 |
| Galaxy Software vs. YuantaP shares Taiwan Mid Cap | Galaxy Software vs. YuantaP shares Taiwan Electronics | Galaxy Software vs. Fubon MSCI Taiwan | Galaxy Software vs. YuantaP shares Taiwan Top |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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