Correlation Between CTBC Financial and HIM International
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and HIM International 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 HIM International 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 HIM International Music, you can compare the effects of market volatilities on CTBC Financial and HIM International 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 HIM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and HIM International.
Diversification Opportunities for CTBC Financial and HIM International
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CTBC and HIM is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and HIM International Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIM International Music 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 HIM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIM International Music has no effect on the direction of CTBC Financial i.e., CTBC Financial and HIM International go up and down completely randomly.
Pair Corralation between CTBC Financial and HIM International
Assuming the 90 days trading horizon CTBC Financial is expected to generate 8.64 times less return on investment than HIM International. But when comparing it to its historical volatility, CTBC Financial Holding is 6.51 times less risky than HIM International. It trades about 0.03 of its potential returns per unit of risk. HIM International Music is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,247 in HIM International Music on September 12, 2024 and sell it today you would earn a total of 2,003 from holding HIM International Music or generate 19.55% 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. HIM International Music
Performance |
| Timeline |
| CTBC Financial Holding |
| HIM International Music |
CTBC Financial and HIM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTBC Financial and HIM International
The main advantage of trading using opposite CTBC Financial and HIM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, HIM International 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 HIM International will offset losses from the drop in HIM International'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 |
| HIM International vs. Ruentex Development Co | HIM International vs. WiseChip Semiconductor | HIM International vs. Novatek Microelectronics Corp | HIM International vs. Leader Electronics |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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