Correlation Between Great Taipei and CTCI Corp
Can any of the company-specific risk be diversified away by investing in both Great Taipei and CTCI Corp 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 Great Taipei and CTCI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Taipei Gas and CTCI Corp, you can compare the effects of market volatilities on Great Taipei and CTCI Corp 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 Great Taipei with a short position of CTCI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Taipei and CTCI Corp.
Diversification Opportunities for Great Taipei and CTCI Corp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and CTCI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Great Taipei Gas and CTCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTCI Corp and Great Taipei 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 Great Taipei Gas are associated (or correlated) with CTCI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTCI Corp has no effect on the direction of Great Taipei i.e., Great Taipei and CTCI Corp go up and down completely randomly.
Pair Corralation between Great Taipei and CTCI Corp
Assuming the 90 days trading horizon Great Taipei Gas is expected to generate 0.27 times more return on investment than CTCI Corp. However, Great Taipei Gas is 3.74 times less risky than CTCI Corp. It trades about 0.06 of its potential returns per unit of risk. CTCI Corp is currently generating about -0.46 per unit of risk. If you would invest 3,015 in Great Taipei Gas on August 24, 2024 and sell it today you would earn a total of 10.00 from holding Great Taipei Gas or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Taipei Gas vs. CTCI Corp
Performance |
| Timeline |
| Great Taipei Gas |
| CTCI Corp |
Great Taipei and CTCI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Taipei and CTCI Corp
The main advantage of trading using opposite Great Taipei and CTCI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Taipei position performs unexpectedly, CTCI Corp 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 CTCI Corp will offset losses from the drop in CTCI Corp's long position.| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Leatec Fine Ceramics |
| CTCI Corp vs. Taiwan Secom Co | CTCI Corp vs. Pou Chen Corp | CTCI Corp vs. Formosa Petrochemical Corp | CTCI Corp vs. Cheng Shin Rubber |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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