Correlation Between CTBC Financial and ScinoPharm Taiwan
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and ScinoPharm Taiwan 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 ScinoPharm Taiwan 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 ScinoPharm Taiwan, you can compare the effects of market volatilities on CTBC Financial and ScinoPharm Taiwan 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 ScinoPharm Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and ScinoPharm Taiwan.
Diversification Opportunities for CTBC Financial and ScinoPharm Taiwan
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CTBC and ScinoPharm is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and ScinoPharm Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScinoPharm Taiwan 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 ScinoPharm Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScinoPharm Taiwan has no effect on the direction of CTBC Financial i.e., CTBC Financial and ScinoPharm Taiwan go up and down completely randomly.
Pair Corralation between CTBC Financial and ScinoPharm Taiwan
Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.2 times more return on investment than ScinoPharm Taiwan. However, CTBC Financial Holding is 4.96 times less risky than ScinoPharm Taiwan. It trades about 0.02 of its potential returns per unit of risk. ScinoPharm Taiwan is currently generating about -0.02 per unit of risk. If you would invest 5,950 in CTBC Financial Holding on September 15, 2024 and sell it today you would earn a total of 160.00 from holding CTBC Financial Holding or generate 2.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CTBC Financial Holding vs. ScinoPharm Taiwan
Performance |
Timeline |
CTBC Financial Holding |
ScinoPharm Taiwan |
CTBC Financial and ScinoPharm Taiwan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CTBC Financial and ScinoPharm Taiwan
The main advantage of trading using opposite CTBC Financial and ScinoPharm Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, ScinoPharm Taiwan 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 ScinoPharm Taiwan will offset losses from the drop in ScinoPharm Taiwan's long position.CTBC Financial vs. Fubon Financial Holding | CTBC Financial vs. YuantaP shares Taiwan Mid Cap | CTBC Financial vs. YuantaP shares Taiwan Electronics | CTBC Financial vs. Fubon MSCI Taiwan |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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