Correlation Between CTCI Corp and Fuh Hwa

Can any of the company-specific risk be diversified away by investing in both CTCI Corp and Fuh Hwa 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 CTCI Corp and Fuh Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CTCI Corp and Fuh Hwa Emerging, you can compare the effects of market volatilities on CTCI Corp and Fuh Hwa 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 CTCI Corp with a short position of Fuh Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTCI Corp and Fuh Hwa.

Diversification Opportunities for CTCI Corp and Fuh Hwa

0.84

Correlation Coefficient

CTCI Corp  Fuh Hwa

Very poor diversification

The 3 months correlation between CTCI and Fuh is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and Fuh Hwa Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuh Hwa Emerging and CTCI Corp 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 CTCI Corp are associated (or correlated) with Fuh Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuh Hwa Emerging has no effect on the direction of CTCI Corp i.e., CTCI Corp and Fuh Hwa go up and down completely randomly.

Pair Corralation between CTCI Corp and Fuh Hwa

Assuming the 90 days trading horizon CTCI Corp is expected to generate 1.69 times more return on investment than Fuh Hwa. However, CTCI Corp is 1.69 times more volatile than Fuh Hwa Emerging. It trades about 0.11 of its potential returns per unit of risk. Fuh Hwa Emerging is currently generating about 0.08 per unit of risk. If you would invest  3,900  in CTCI Corp on December 29, 2024 and sell it today you would earn a total of  215.00  from holding CTCI Corp or generate 5.51% return on investment over 90 days.

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

CTCI Corp  vs.  Fuh Hwa Emerging

CTCI Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTCI Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CTCI Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fuh Hwa Emerging

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fuh Hwa Emerging are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fuh Hwa is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CTCI Corp and Fuh Hwa

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

The idea behind CTCI Corp and Fuh Hwa Emerging 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.