Correlation Between CTBC Financial and Group Up
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Group Up 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 Group Up 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 Group Up Industrial, you can compare the effects of market volatilities on CTBC Financial and Group Up 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 Group Up. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Group Up.
Diversification Opportunities for CTBC Financial and Group Up
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and Group is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Group Up Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group Up Industrial 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 Group Up. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group Up Industrial has no effect on the direction of CTBC Financial i.e., CTBC Financial and Group Up go up and down completely randomly.
Pair Corralation between CTBC Financial and Group Up
Assuming the 90 days trading horizon CTBC Financial is expected to generate 1.84 times less return on investment than Group Up. But when comparing it to its historical volatility, CTBC Financial Holding is 2.24 times less risky than Group Up. It trades about 0.1 of its potential returns per unit of risk. Group Up Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,010 in Group Up Industrial on October 23, 2024 and sell it today you would earn a total of 13,540 from holding Group Up Industrial or generate 150.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
CTBC Financial Holding vs. Group Up Industrial
Performance |
Timeline |
CTBC Financial Holding |
Group Up Industrial |
CTBC Financial and Group Up Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CTBC Financial and Group Up
The main advantage of trading using opposite CTBC Financial and Group Up positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Group Up 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 Group Up will offset losses from the drop in Group Up's long position.CTBC Financial vs. Fubon Financial Holding | CTBC Financial vs. Cathay Financial Holding | CTBC Financial vs. Mega Financial Holding | CTBC Financial vs. First Financial Holding |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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