Correlation Between CSBC Corp and Eva Airways

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

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

Diversification Opportunities for CSBC Corp and Eva Airways

-0.44

Correlation Coefficient

CSBC Corp  Eva Airways

Very good diversification

The 3 months correlation between CSBC and Eva is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CSBC Corp Taiwan and Eva Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eva Airways Corp and CSBC 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 CSBC Corp Taiwan are associated (or correlated) with Eva Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eva Airways Corp has no effect on the direction of CSBC Corp i.e., CSBC Corp and Eva Airways go up and down completely randomly.

Pair Corralation between CSBC Corp and Eva Airways

Assuming the 90 days trading horizon CSBC Corp Taiwan is expected to generate 1.01 times more return on investment than Eva Airways. However, CSBC Corp is 1.01 times more volatile than Eva Airways Corp. It trades about 0.16 of its potential returns per unit of risk. Eva Airways Corp is currently generating about -0.04 per unit of risk. If you would invest  1,530  in CSBC Corp Taiwan on December 28, 2024 and sell it today you would earn a total of  220.00  from holding CSBC Corp Taiwan or generate 14.38% return on investment over 90 days.

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

CSBC Corp Taiwan  vs.  Eva Airways Corp

CSBC Corp Taiwan

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSBC Corp Taiwan are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CSBC Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Eva Airways Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eva Airways Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eva Airways 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 CSBC Corp and Eva Airways

The main advantage of trading using opposite CSBC Corp and Eva Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSBC Corp position performs unexpectedly, Eva Airways 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 Eva Airways will offset losses from the drop in Eva Airways' long position.

The idea behind CSBC Corp Taiwan and Eva Airways 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 Anywhere module to track or share privately all of your investments from the convenience of any device.