Correlation Between Tait Marketing and CTBC Financial

Can any of the company-specific risk be diversified away by investing in both Tait Marketing 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 Tait Marketing and CTBC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tait Marketing Distribution and CTBC Financial Holding, you can compare the effects of market volatilities on Tait Marketing 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 Tait Marketing with a short position of CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tait Marketing and CTBC Financial.

Diversification Opportunities for Tait Marketing and CTBC Financial

0.26

Correlation Coefficient

Tait Marketing  CTBC Financial

Modest diversification

The 3 months correlation between Tait and CTBC is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tait Marketing Distribution 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 Tait Marketing 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 Tait Marketing Distribution 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 Tait Marketing i.e., Tait Marketing and CTBC Financial go up and down completely randomly.

Pair Corralation between Tait Marketing and CTBC Financial

Assuming the 90 days trading horizon Tait Marketing Distribution is expected to under-perform the CTBC Financial. In addition to that, Tait Marketing is 6.39 times more volatile than CTBC Financial Holding. It trades about -0.03 of its total potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.19 per unit of volatility. If you would invest  6,030  in CTBC Financial Holding on September 16, 2024 and sell it today you would earn a total of  80.00  from holding CTBC Financial Holding or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tait Marketing Distribution  vs.  CTBC Financial Holding

Tait Marketing Distr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tait Marketing Distribution has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tait Marketing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CTBC Financial Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CTBC Financial Holding are ranked lower than 14 (%) 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.

Pair Trading with Tait Marketing and CTBC Financial

The main advantage of trading using opposite Tait Marketing and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tait Marketing 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.

The idea behind Tait Marketing Distribution and CTBC Financial Holding 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.