Correlation Between CTBC Financial and ATrack Technology

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

Diversification Opportunities for CTBC Financial and ATrack Technology

-0.77

Correlation Coefficient

CTBC Financial  ATrack Technology

Pay attention - limited upside

The 3 months correlation between CTBC and ATrack is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and ATrack Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATrack 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 ATrack Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATrack Technology has no effect on the direction of CTBC Financial i.e., CTBC Financial and ATrack Technology go up and down completely randomly.

Pair Corralation between CTBC Financial and ATrack Technology

Assuming the 90 days trading horizon CTBC Financial is expected to generate 9.82 times less return on investment than ATrack Technology. But when comparing it to its historical volatility, CTBC Financial Holding is 17.72 times less risky than ATrack Technology. It trades about 0.04 of its potential returns per unit of risk. ATrack Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,750  in ATrack Technology on October 24, 2024 and sell it today you would earn a total of  95.00  from holding ATrack Technology or generate 5.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

CTBC Financial Holding  vs.  ATrack Technology

CTBC Financial Holding

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CTBC Financial Holding are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CTBC Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ATrack Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATrack Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with CTBC Financial and ATrack Technology

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

The idea behind CTBC Financial Holding and ATrack Technology 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.