Correlation Between CTBC Financial and Magnate Technology
Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Magnate Technology 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 Magnate Technology 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 Magnate Technology Co, you can compare the effects of market volatilities on CTBC Financial and Magnate Technology 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 Magnate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Magnate Technology.
Diversification Opportunities for CTBC Financial and Magnate Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CTBC and Magnate is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Magnate Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnate Technology 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 Magnate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnate Technology has no effect on the direction of CTBC Financial i.e., CTBC Financial and Magnate Technology go up and down completely randomly.
Pair Corralation between CTBC Financial and Magnate Technology
Assuming the 90 days trading horizon CTBC Financial is expected to generate 10.52 times less return on investment than Magnate Technology. But when comparing it to its historical volatility, CTBC Financial Holding is 15.55 times less risky than Magnate Technology. It trades about 0.29 of its potential returns per unit of risk. Magnate Technology Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,655 in Magnate Technology Co on December 30, 2024 and sell it today you would earn a total of 1,675 from holding Magnate Technology Co or generate 45.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CTBC Financial Holding vs. Magnate Technology Co
Performance |
Timeline |
CTBC Financial Holding |
Magnate Technology |
CTBC Financial and Magnate Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CTBC Financial and Magnate Technology
The main advantage of trading using opposite CTBC Financial and Magnate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC Financial position performs unexpectedly, Magnate Technology 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 Magnate Technology will offset losses from the drop in Magnate Technology's long position.CTBC Financial vs. U Media Communications | CTBC Financial vs. Rafael Microelectronics | CTBC Financial vs. Sunspring Metal Corp | CTBC Financial vs. Orient Semiconductor Electronics |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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