Correlation Between Cathay Nikkei and Cathay Global
Can any of the company-specific risk be diversified away by investing in both Cathay Nikkei and Cathay Global 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 Cathay Nikkei and Cathay Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Nikkei 225 and Cathay Global Autonomous, you can compare the effects of market volatilities on Cathay Nikkei and Cathay Global 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 Cathay Nikkei with a short position of Cathay Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Nikkei and Cathay Global.
Diversification Opportunities for Cathay Nikkei and Cathay Global
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cathay and Cathay is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Nikkei 225 and Cathay Global Autonomous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Global Autonomous and Cathay Nikkei 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 Cathay Nikkei 225 are associated (or correlated) with Cathay Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Global Autonomous has no effect on the direction of Cathay Nikkei i.e., Cathay Nikkei and Cathay Global go up and down completely randomly.
Pair Corralation between Cathay Nikkei and Cathay Global
Assuming the 90 days trading horizon Cathay Nikkei 225 is expected to under-perform the Cathay Global. But the etf apears to be less risky and, when comparing its historical volatility, Cathay Nikkei 225 is 1.47 times less risky than Cathay Global. The etf trades about -0.04 of its potential returns per unit of risk. The Cathay Global Autonomous is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,419 in Cathay Global Autonomous on November 29, 2024 and sell it today you would lose (5.00) from holding Cathay Global Autonomous or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Nikkei 225 vs. Cathay Global Autonomous
Performance |
| Timeline |
| Cathay Nikkei 225 |
| Cathay Global Autonomous |
Cathay Nikkei and Cathay Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Nikkei and Cathay Global
The main advantage of trading using opposite Cathay Nikkei and Cathay Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Nikkei position performs unexpectedly, Cathay Global 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 Cathay Global will offset losses from the drop in Cathay Global's long position.| Cathay Nikkei vs. Cathay TIP TAIEX | Cathay Nikkei vs. Cathay Nasdaq AI | Cathay Nikkei vs. Cathay Dow Jones | Cathay Nikkei vs. Cathay Bloomberg Barclays |
| Cathay Global vs. Cathay TIP TAIEX | Cathay Global vs. Cathay Nasdaq AI | Cathay Global vs. Cathay Dow Jones | Cathay Global vs. Cathay Bloomberg Barclays |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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