Correlation Between Jetway Information and CTBC Financial

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

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

Diversification Opportunities for Jetway Information and CTBC Financial

-0.49

Correlation Coefficient

Jetway Information  CTBC Financial

Very good diversification

The 3 months correlation between Jetway and CTBC is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Jetway Information Co 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 Jetway Information 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 Jetway Information Co 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 Jetway Information i.e., Jetway Information and CTBC Financial go up and down completely randomly.

Pair Corralation between Jetway Information and CTBC Financial

Assuming the 90 days trading horizon Jetway Information Co is expected to under-perform the CTBC Financial. In addition to that, Jetway Information is 12.57 times more volatile than CTBC Financial Holding. It trades about -0.19 of its total potential returns per unit of risk. CTBC Financial Holding is currently generating about 0.41 per unit of volatility. If you would invest  6,050  in CTBC Financial Holding on October 10, 2024 and sell it today you would earn a total of  220.00  from holding CTBC Financial Holding or generate 3.64% return on investment over 90 days.

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

Jetway Information Co  vs.  CTBC Financial Holding

Jetway Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jetway Information Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

CTBC Financial Holding

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CTBC Financial Holding are ranked lower than 32 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Jetway Information and CTBC Financial

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

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.