Correlation Between Ethereum and CTBC Treasury

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

By analyzing existing cross correlation between Ethereum and CTBC Treasury 20, you can compare the effects of market volatilities on Ethereum and CTBC Treasury 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 Ethereum with a short position of CTBC Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and CTBC Treasury.

Diversification Opportunities for Ethereum and CTBC Treasury

-0.66

Correlation Coefficient

Ethereum  CTBC Treasury

Excellent diversification

The 3 months correlation between Ethereum and CTBC is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and CTBC Treasury 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC Treasury 20 and Ethereum 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 Ethereum are associated (or correlated) with CTBC Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC Treasury 20 has no effect on the direction of Ethereum i.e., Ethereum and CTBC Treasury go up and down completely randomly.

Pair Corralation between Ethereum and CTBC Treasury

Assuming the 90 days trading horizon Ethereum is expected to under-perform the CTBC Treasury. In addition to that, Ethereum is 5.13 times more volatile than CTBC Treasury 20. It trades about -0.2 of its total potential returns per unit of risk. CTBC Treasury 20 is currently generating about 0.11 per unit of volatility. If you would invest  2,864  in CTBC Treasury 20 on December 23, 2024 and sell it today you would earn a total of  140.00  from holding CTBC Treasury 20 or generate 4.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.69%
Values	Daily Returns

Ethereum  vs.  CTBC Treasury 20

Ethereum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethereum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Ethereum shareholders.

CTBC Treasury 20

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTBC Treasury 20 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CTBC Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ethereum and CTBC Treasury

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

The idea behind Ethereum and CTBC Treasury 20 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.