Correlation Between Tainet Communication and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Tainet Communication 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 Tainet Communication and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainet Communication System and CTBC Financial Holding, you can compare the effects of market volatilities on Tainet Communication 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 Tainet Communication with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainet Communication and CTBC Financial.
Diversification Opportunities for Tainet Communication and CTBC Financial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tainet and CTBC is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tainet Communication System 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 Tainet Communication 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 Tainet Communication System 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 Tainet Communication i.e., Tainet Communication and CTBC Financial go up and down completely randomly.
Pair Corralation between Tainet Communication and CTBC Financial
Assuming the 90 days trading horizon Tainet Communication System is expected to generate 9.55 times more return on investment than CTBC Financial. However, Tainet Communication is 9.55 times more volatile than CTBC Financial Holding. It trades about 0.05 of its potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.02 per unit of risk. If you would invest 5,100 in Tainet Communication System on September 13, 2024 and sell it today you would earn a total of 2,770 from holding Tainet Communication System or generate 54.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainet Communication System vs. CTBC Financial Holding
Performance |
| Timeline |
| Tainet Communication |
| CTBC Financial Holding |
Tainet Communication and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainet Communication and CTBC Financial
The main advantage of trading using opposite Tainet Communication and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainet Communication 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.| Tainet Communication vs. Lian Hwa Foods | Tainet Communication vs. Newretail Co | Tainet Communication vs. Wei Chuan Foods | Tainet Communication vs. Standard Foods Corp |
| CTBC Financial vs. Fubon Financial Holding | CTBC Financial vs. YuantaP shares Taiwan Mid Cap | CTBC Financial vs. YuantaP shares Taiwan Electronics | CTBC Financial vs. Fubon MSCI Taiwan |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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