Correlation Between Cathay Nasdaq and Yuanta Daily
Can any of the company-specific risk be diversified away by investing in both Cathay Nasdaq 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 Nasdaq 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 Nasdaq AI and Yuanta Daily Taiwan, you can compare the effects of market volatilities on Cathay Nasdaq 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 Nasdaq with a short position of Yuanta Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Nasdaq and Yuanta Daily.
Diversification Opportunities for Cathay Nasdaq and Yuanta Daily
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cathay and Yuanta is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Nasdaq AI and Yuanta Daily Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Daily Taiwan and Cathay Nasdaq 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 Nasdaq AI 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 Taiwan has no effect on the direction of Cathay Nasdaq i.e., Cathay Nasdaq and Yuanta Daily go up and down completely randomly.
Pair Corralation between Cathay Nasdaq and Yuanta Daily
Assuming the 90 days trading horizon Cathay Nasdaq AI is expected to generate 0.8 times more return on investment than Yuanta Daily. However, Cathay Nasdaq AI is 1.26 times less risky than Yuanta Daily. It trades about 0.06 of its potential returns per unit of risk. Yuanta Daily Taiwan is currently generating about -0.09 per unit of risk. If you would invest 2,933 in Cathay Nasdaq AI on September 2, 2024 and sell it today you would earn a total of 424.00 from holding Cathay Nasdaq AI or generate 14.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Nasdaq AI vs. Yuanta Daily Taiwan
Performance |
| Timeline |
| Cathay Nasdaq AI |
| Yuanta Daily Taiwan |
Cathay Nasdaq and Yuanta Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Nasdaq and Yuanta Daily
The main advantage of trading using opposite Cathay Nasdaq and Yuanta Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Nasdaq 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 Nasdaq vs. Yuanta Daily CSI | Cathay Nasdaq vs. Fubon FTSE Vietnam | Cathay Nasdaq vs. Paradigm SP GSCI |
| Yuanta Daily vs. Yuanta Daily CSI | Yuanta Daily vs. Fubon FTSE Vietnam | Yuanta Daily vs. Paradigm SP GSCI |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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