Correlation Between CTBC Financial and Yuanta Futures

Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Yuanta Futures 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 Yuanta Futures 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 Yuanta Futures Co, you can compare the effects of market volatilities on CTBC Financial and Yuanta Futures 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 Yuanta Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Yuanta Futures.

Diversification Opportunities for CTBC Financial and Yuanta Futures

-0.62

Correlation Coefficient

CTBC Financial  Yuanta Futures

Excellent diversification

The 3 months correlation between CTBC and Yuanta is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Yuanta Futures Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Futures 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 Yuanta Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Futures has no effect on the direction of CTBC Financial i.e., CTBC Financial and Yuanta Futures go up and down completely randomly.

Pair Corralation between CTBC Financial and Yuanta Futures

Assuming the 90 days trading horizon CTBC Financial Holding is expected to under-perform the Yuanta Futures. But the stock apears to be less risky and, when comparing its historical volatility, CTBC Financial Holding is 3.41 times less risky than Yuanta Futures. The stock trades about -0.04 of its potential returns per unit of risk. The Yuanta Futures Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8,310  in Yuanta Futures Co on September 18, 2024 and sell it today you would earn a total of  560.00  from holding Yuanta Futures Co or generate 6.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CTBC Financial Holding  vs.  Yuanta Futures Co

CTBC Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTBC Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CTBC Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Yuanta Futures

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Futures Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yuanta Futures may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CTBC Financial and Yuanta Futures

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

The idea behind CTBC Financial Holding and Yuanta Futures Co 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.