Correlation Between Landis Taipei and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Landis Taipei 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 Landis Taipei and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Landis Taipei Hotel and CTBC Financial Holding, you can compare the effects of market volatilities on Landis Taipei 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 Landis Taipei with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Landis Taipei and CTBC Financial.
Diversification Opportunities for Landis Taipei and CTBC Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Landis and CTBC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Landis Taipei Hotel 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 Landis Taipei 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 Landis Taipei Hotel 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 Landis Taipei i.e., Landis Taipei and CTBC Financial go up and down completely randomly.
Pair Corralation between Landis Taipei and CTBC Financial
Assuming the 90 days trading horizon Landis Taipei Hotel is expected to under-perform the CTBC Financial. In addition to that, Landis Taipei is 12.81 times more volatile than CTBC Financial Holding. It trades about -0.02 of its total potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.3 per unit of volatility. If you would invest 5,600 in CTBC Financial Holding on September 25, 2024 and sell it today you would earn a total of 80.00 from holding CTBC Financial Holding or generate 1.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Landis Taipei Hotel vs. CTBC Financial Holding
Performance |
Timeline |
Landis Taipei Hotel |
CTBC Financial Holding |
Landis Taipei and CTBC Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Landis Taipei and CTBC Financial
The main advantage of trading using opposite Landis Taipei and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Landis Taipei 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.Landis Taipei vs. United Radiant Technology | Landis Taipei vs. Power Wind Health | Landis Taipei vs. First Copper Technology | Landis Taipei vs. Healthconn Corp |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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