Correlation Between Cathay Dow and Yuanta Daily
Can any of the company-specific risk be diversified away by investing in both Cathay Dow and Yuanta Daily 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 Dow and Yuanta Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Dow Jones and Yuanta Daily CSI, you can compare the effects of market volatilities on Cathay Dow and Yuanta Daily 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 Dow with a short position of Yuanta Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Dow and Yuanta Daily.
Diversification Opportunities for Cathay Dow and Yuanta Daily
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cathay and Yuanta is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Dow Jones and Yuanta Daily CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily CSI and Cathay Dow 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 Dow Jones are associated (or correlated) with Yuanta Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Daily CSI has no effect on the direction of Cathay Dow i.e., Cathay Dow and Yuanta Daily go up and down completely randomly.
Pair Corralation between Cathay Dow and Yuanta Daily
Assuming the 90 days trading horizon Cathay Dow Jones is expected to generate 0.45 times more return on investment than Yuanta Daily. However, Cathay Dow Jones is 2.23 times less risky than Yuanta Daily. It trades about 0.27 of its potential returns per unit of risk. Yuanta Daily CSI is currently generating about -0.03 per unit of risk. If you would invest 1,534 in Cathay Dow Jones on August 31, 2024 and sell it today you would earn a total of 91.00 from holding Cathay Dow Jones or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Dow Jones vs. Yuanta Daily CSI
Performance |
| Timeline |
| Cathay Dow Jones |
| Yuanta Daily CSI |
Cathay Dow and Yuanta Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Dow and Yuanta Daily
The main advantage of trading using opposite Cathay Dow and Yuanta Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Dow position performs unexpectedly, Yuanta Daily 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 Yuanta Daily will offset losses from the drop in Yuanta Daily's long position.| Cathay Dow vs. Cathay TIP TAIEX | Cathay Dow vs. Cathay Nasdaq AI | Cathay Dow vs. Cathay Bloomberg Barclays | Cathay Dow vs. Cathay TAIEX Daily |
| Yuanta Daily vs. Yuanta Daily Taiwan | Yuanta Daily vs. Cathay Taiwan 5G | Yuanta Daily vs. Cathay Sustainability High | Yuanta Daily vs. Fubon FTSE Vietnam |
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 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.
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