Correlation Between CTBC Financial and Pontex Polyblend

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

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

Diversification Opportunities for CTBC Financial and Pontex Polyblend

-0.56

Correlation Coefficient

CTBC Financial  Pontex Polyblend

Excellent diversification

The 3 months correlation between CTBC and Pontex is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Pontex Polyblend CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontex Polyblend CoLtd and CTBC Financial 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 CTBC Financial Holding are associated (or correlated) with Pontex Polyblend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontex Polyblend CoLtd has no effect on the direction of CTBC Financial i.e., CTBC Financial and Pontex Polyblend go up and down completely randomly.

Pair Corralation between CTBC Financial and Pontex Polyblend

Assuming the 90 days trading horizon CTBC Financial is expected to generate 27.31 times less return on investment than Pontex Polyblend. But when comparing it to its historical volatility, CTBC Financial Holding is 7.91 times less risky than Pontex Polyblend. It trades about 0.0 of its potential returns per unit of risk. Pontex Polyblend CoLtd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,179  in Pontex Polyblend CoLtd on February 21, 2024 and sell it today you would earn a total of  66.00  from holding Pontex Polyblend CoLtd or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.77%
Values	Daily Returns

CTBC Financial Holding  vs.  Pontex Polyblend CoLtd

CTBC Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTBC Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental 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.

Pontex Polyblend CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pontex Polyblend CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pontex Polyblend may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with CTBC Financial and Pontex Polyblend

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

The idea behind CTBC Financial Holding and Pontex Polyblend CoLtd 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.