Correlation Between Dynamic Medical and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Dynamic Medical and CTBC Financial 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 Dynamic Medical and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynamic Medical Technologies and CTBC Financial Holding, you can compare the effects of market volatilities on Dynamic Medical and CTBC Financial 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 Dynamic Medical with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Medical and CTBC Financial.
Diversification Opportunities for Dynamic Medical and CTBC Financial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dynamic and CTBC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Medical Technologies and CTBC Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC Financial Holding and Dynamic Medical 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 Dynamic Medical Technologies are associated (or correlated) with CTBC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC Financial Holding has no effect on the direction of Dynamic Medical i.e., Dynamic Medical and CTBC Financial go up and down completely randomly.
Pair Corralation between Dynamic Medical and CTBC Financial
Assuming the 90 days trading horizon Dynamic Medical Technologies is expected to under-perform the CTBC Financial. In addition to that, Dynamic Medical is 3.8 times more volatile than CTBC Financial Holding. It trades about -0.05 of its total potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.44 per unit of volatility. If you would invest 6,080 in CTBC Financial Holding on September 25, 2024 and sell it today you would earn a total of 110.00 from holding CTBC Financial Holding or generate 1.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dynamic Medical Technologies vs. CTBC Financial Holding
Performance |
Timeline |
Dynamic Medical Tech |
CTBC Financial Holding |
Dynamic Medical and CTBC Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dynamic Medical and CTBC Financial
The main advantage of trading using opposite Dynamic Medical and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Medical position performs unexpectedly, CTBC Financial 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 CTBC Financial will offset losses from the drop in CTBC Financial's long position.Dynamic Medical vs. Winstek Semiconductor Co | Dynamic Medical vs. Davicom Semiconductor | Dynamic Medical vs. Sunspring Metal Corp | Dynamic Medical vs. Taiwan Semiconductor Co |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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