Correlation Between CTCI Corp and Hotai
Can any of the company-specific risk be diversified away by investing in both CTCI Corp and Hotai 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 Hotai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTCI Corp and Hotai Motor Co, you can compare the effects of market volatilities on CTCI Corp and Hotai 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 Hotai. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTCI Corp and Hotai.
Diversification Opportunities for CTCI Corp and Hotai
Weak diversification
The 3 months correlation between CTCI and Hotai is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and Hotai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Motor 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 Hotai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Motor has no effect on the direction of CTCI Corp i.e., CTCI Corp and Hotai go up and down completely randomly.
Pair Corralation between CTCI Corp and Hotai
Assuming the 90 days trading horizon CTCI Corp is expected to under-perform the Hotai. But the stock apears to be less risky and, when comparing its historical volatility, CTCI Corp is 1.43 times less risky than Hotai. The stock trades about -0.36 of its potential returns per unit of risk. The Hotai Motor Co is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 64,900 in Hotai Motor Co on September 1, 2024 and sell it today you would lose (3,500) from holding Hotai Motor Co or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CTCI Corp vs. Hotai Motor Co
Performance |
| Timeline |
| CTCI Corp |
| Hotai Motor |
CTCI Corp and Hotai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTCI Corp and Hotai
The main advantage of trading using opposite CTCI Corp and Hotai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTCI Corp position performs unexpectedly, Hotai 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 Hotai will offset losses from the drop in Hotai'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 |
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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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