Correlation Between Fubon MSCI and CTCI Corp

Can any of the company-specific risk be diversified away by investing in both Fubon MSCI 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 Fubon MSCI and CTCI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fubon MSCI Taiwan and CTCI Corp, you can compare the effects of market volatilities on Fubon MSCI 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 Fubon MSCI with a short position of CTCI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and CTCI Corp.

Diversification Opportunities for Fubon MSCI and CTCI Corp

-0.23

Correlation Coefficient

Fubon MSCI  CTCI Corp

Very good diversification

The 3 months correlation between Fubon and CTCI is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and CTCI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTCI Corp and Fubon MSCI 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 Fubon MSCI Taiwan 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 Fubon MSCI i.e., Fubon MSCI and CTCI Corp go up and down completely randomly.

Pair Corralation between Fubon MSCI and CTCI Corp

Assuming the 90 days trading horizon Fubon MSCI is expected to generate 1.49 times less return on investment than CTCI Corp. In addition to that, Fubon MSCI is 1.47 times more volatile than CTCI Corp. It trades about 0.03 of its total potential returns per unit of risk. CTCI Corp is currently generating about 0.07 per unit of volatility. If you would invest  4,095  in CTCI Corp on December 1, 2024 and sell it today you would earn a total of  125.00  from holding CTCI Corp or generate 3.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fubon MSCI Taiwan  vs.  CTCI Corp

Fubon MSCI Taiwan

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon MSCI Taiwan are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Fubon MSCI is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CTCI Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTCI Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CTCI Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fubon MSCI and CTCI Corp

The main advantage of trading using opposite Fubon MSCI and CTCI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI 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.

The idea behind Fubon MSCI Taiwan and CTCI Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.