Correlation Between CTCI Corp and Lian Hwa
Can any of the company-specific risk be diversified away by investing in both CTCI Corp and Lian Hwa 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 CTCI Corp and Lian Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTCI Corp and Lian Hwa Foods, you can compare the effects of market volatilities on CTCI Corp and Lian Hwa 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 CTCI Corp with a short position of Lian Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTCI Corp and Lian Hwa.
Diversification Opportunities for CTCI Corp and Lian Hwa
Pay attention - limited upside
The 3 months correlation between CTCI and Lian is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and Lian Hwa Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lian Hwa Foods and CTCI Corp 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 CTCI Corp are associated (or correlated) with Lian Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lian Hwa Foods has no effect on the direction of CTCI Corp i.e., CTCI Corp and Lian Hwa go up and down completely randomly.
Pair Corralation between CTCI Corp and Lian Hwa
Assuming the 90 days trading horizon CTCI Corp is expected to under-perform the Lian Hwa. But the stock apears to be less risky and, when comparing its historical volatility, CTCI Corp is 1.46 times less risky than Lian Hwa. The stock trades about -0.45 of its potential returns per unit of risk. The Lian Hwa Foods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 11,200 in Lian Hwa Foods on August 25, 2024 and sell it today you would earn a total of 350.00 from holding Lian Hwa Foods or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTCI Corp vs. Lian Hwa Foods
Performance |
| Timeline |
| CTCI Corp |
| Lian Hwa Foods |
CTCI Corp and Lian Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTCI Corp and Lian Hwa
The main advantage of trading using opposite CTCI Corp and Lian Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTCI Corp position performs unexpectedly, Lian Hwa 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 Lian Hwa will offset losses from the drop in Lian Hwa's long position.| CTCI Corp vs. Taiwan Secom Co | CTCI Corp vs. Pou Chen Corp | CTCI Corp vs. Formosa Petrochemical Corp | CTCI Corp vs. Cheng Shin Rubber |
| Lian Hwa vs. Uni President Enterprises Corp | Lian Hwa vs. Taiwan Cement Corp | Lian Hwa vs. Ruentex Development Co | Lian Hwa vs. Symtek Automation Asia |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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