Correlation Between CTBC Financial and Ju Teng

Can any of the company-specific risk be diversified away by investing in both CTBC Financial and Ju Teng 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 Ju Teng 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 Ju Teng International, you can compare the effects of market volatilities on CTBC Financial and Ju Teng 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 Ju Teng. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTBC Financial and Ju Teng.

Diversification Opportunities for CTBC Financial and Ju Teng

0.66

Correlation Coefficient

CTBC Financial  Ju Teng

Poor diversification

The 3 months correlation between CTBC and 9136 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CTBC Financial Holding and Ju Teng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ju Teng International 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 Ju Teng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ju Teng International has no effect on the direction of CTBC Financial i.e., CTBC Financial and Ju Teng go up and down completely randomly.

Pair Corralation between CTBC Financial and Ju Teng

Assuming the 90 days trading horizon CTBC Financial Holding is expected to generate 0.33 times more return on investment than Ju Teng. However, CTBC Financial Holding is 3.02 times less risky than Ju Teng. It trades about -0.15 of its potential returns per unit of risk. Ju Teng International is currently generating about -0.11 per unit of risk. If you would invest  5,980  in CTBC Financial Holding on February 20, 2024 and sell it today you would lose (140.00) from holding CTBC Financial Holding or give up 2.34% of portfolio value over 90 days.

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

CTBC Financial Holding  vs.  Ju Teng International

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.

Ju Teng International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CTBC Financial and Ju Teng

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

The idea behind CTBC Financial Holding and Ju Teng International 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 CEOs Directory module to screen CEOs from public companies around the world.