Correlation Between LARGAN Precision and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both LARGAN Precision and CTBC Financial 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 LARGAN Precision and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LARGAN Precision Co and CTBC Financial Holding, you can compare the effects of market volatilities on LARGAN Precision and CTBC Financial 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 LARGAN Precision with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LARGAN Precision and CTBC Financial.
Diversification Opportunities for LARGAN Precision and CTBC Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LARGAN and CTBC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and CTBC Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC Financial Holding and LARGAN Precision 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 LARGAN Precision Co are associated (or correlated) with CTBC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC Financial Holding has no effect on the direction of LARGAN Precision i.e., LARGAN Precision and CTBC Financial go up and down completely randomly.
Pair Corralation between LARGAN Precision and CTBC Financial
Assuming the 90 days trading horizon LARGAN Precision Co is expected to generate 12.31 times more return on investment than CTBC Financial. However, LARGAN Precision is 12.31 times more volatile than CTBC Financial Holding. It trades about 0.15 of its potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.58 per unit of risk. If you would invest 255,000 in LARGAN Precision Co on October 20, 2024 and sell it today you would earn a total of 18,000 from holding LARGAN Precision Co or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LARGAN Precision Co vs. CTBC Financial Holding
Performance |
| Timeline |
| LARGAN Precision |
| CTBC Financial Holding |
LARGAN Precision and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LARGAN Precision and CTBC Financial
The main advantage of trading using opposite LARGAN Precision and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LARGAN Precision position performs unexpectedly, CTBC Financial 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 CTBC Financial will offset losses from the drop in CTBC Financial's long position.| LARGAN Precision vs. MediaTek | LARGAN Precision vs. Hon Hai Precision | LARGAN Precision vs. Delta Electronics | LARGAN Precision vs. Catcher Technology Co |
| CTBC Financial vs. Est Global Apparel | CTBC Financial vs. Advanced Wireless Semiconductor | CTBC Financial vs. Dimerco Data System | CTBC Financial vs. AVer Information |
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 CEOs Directory module to screen CEOs from public companies around the world.
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