Correlation Between Grand Plastic and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Grand Plastic 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 Grand Plastic and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Plastic Technology and CTBC Financial Holding, you can compare the effects of market volatilities on Grand Plastic 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 Grand Plastic with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Plastic and CTBC Financial.
Diversification Opportunities for Grand Plastic and CTBC Financial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grand and CTBC is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Grand Plastic Technology 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 Grand Plastic 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 Grand Plastic Technology 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 Grand Plastic i.e., Grand Plastic and CTBC Financial go up and down completely randomly.
Pair Corralation between Grand Plastic and CTBC Financial
Assuming the 90 days trading horizon Grand Plastic Technology is expected to generate 11.28 times more return on investment than CTBC Financial. However, Grand Plastic is 11.28 times more volatile than CTBC Financial Holding. It trades about 0.2 of its potential returns per unit of risk. CTBC Financial Holding is currently generating about -0.19 per unit of risk. If you would invest 153,000 in Grand Plastic Technology on August 27, 2024 and sell it today you would earn a total of 16,500 from holding Grand Plastic Technology or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Plastic Technology vs. CTBC Financial Holding
Performance |
| Timeline |
| Grand Plastic Technology |
| CTBC Financial Holding |
Grand Plastic and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Plastic and CTBC Financial
The main advantage of trading using opposite Grand Plastic and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Plastic 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.| Grand Plastic vs. Para Light Electronics | Grand Plastic vs. ANJI Technology Co | Grand Plastic vs. Aiptek International | Grand Plastic vs. General Interface Solution |
| CTBC Financial vs. Nankang Rubber Tire | CTBC Financial vs. Grand Ocean Retail | CTBC Financial vs. Grand Plastic Technology | CTBC Financial vs. Tainet Communication System |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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