Correlation Between CTBC Financial and Macroblock

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

By analyzing existing cross correlation between CTBC Financial Holding and Macroblock, you can compare the effects of market volatilities on CTBC Financial and Macroblock 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 CTBC Financial with a short position of Macroblock. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Macroblock.

Diversification Opportunities for CTBC Financial and Macroblock

-0.92

Correlation Coefficient

CTBC Financial  Macroblock

Pay attention - limited upside

The 3 months correlation between CTBC and Macroblock is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Macroblock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macroblock and CTBC Financial 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 CTBC Financial Holding are associated (or correlated) with Macroblock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macroblock has no effect on the direction of CTBC Financial i.e., CTBC Financial and Macroblock go up and down completely randomly.

Pair Corralation between CTBC Financial and Macroblock

Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.76 times more return on investment than Macroblock. However, CTBC Financial Holding is 1.31 times less risky than Macroblock. It trades about 0.11 of its potential returns per unit of risk. Macroblock is currently generating about -0.05 per unit of risk. If you would invest  2,073  in CTBC Financial Holding on October 5, 2024 and sell it today you would earn a total of  1,797  from holding CTBC Financial Holding or generate 86.69% return on investment over 90 days.

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

CTBC Financial Holding  vs.  Macroblock

CTBC Financial Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CTBC Financial Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CTBC Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Macroblock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macroblock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with CTBC Financial and Macroblock

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

The idea behind CTBC Financial Holding and Macroblock 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.