Correlation Between First Financial and Taiwan Business
Can any of the company-specific risk be diversified away by investing in both First Financial and Taiwan Business 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 First Financial and Taiwan Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Holding and Taiwan Business Bank, you can compare the effects of market volatilities on First Financial and Taiwan Business 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 First Financial with a short position of Taiwan Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Taiwan Business.
Diversification Opportunities for First Financial and Taiwan Business
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Taiwan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Holding and Taiwan Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Business Bank and First 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 First Financial Holding are associated (or correlated) with Taiwan Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Business Bank has no effect on the direction of First Financial i.e., First Financial and Taiwan Business go up and down completely randomly.
Pair Corralation between First Financial and Taiwan Business
Assuming the 90 days trading horizon First Financial is expected to generate 1.26 times less return on investment than Taiwan Business. But when comparing it to its historical volatility, First Financial Holding is 1.42 times less risky than Taiwan Business. It trades about 0.02 of its potential returns per unit of risk. Taiwan Business Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,405 in Taiwan Business Bank on August 30, 2024 and sell it today you would earn a total of 95.00 from holding Taiwan Business Bank or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Holding vs. Taiwan Business Bank
Performance |
| Timeline |
| First Financial Holding |
| Taiwan Business Bank |
First Financial and Taiwan Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Taiwan Business
The main advantage of trading using opposite First Financial and Taiwan Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Taiwan Business 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 Taiwan Business will offset losses from the drop in Taiwan Business' long position.| First Financial vs. Mega Financial Holding | First Financial vs. CTBC Financial Holding | First Financial vs. Hua Nan Financial | First Financial vs. ESUN Financial Holding |
| Taiwan Business vs. First Financial Holding | Taiwan Business vs. Chang Hwa Commercial | Taiwan Business vs. Sinopac Financial Holdings | Taiwan Business vs. Taishin Financial Holding |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stocks Directory Find actively traded stocks across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |