Correlation Between Cathay Sustainability and Cathay TAIEX
Can any of the company-specific risk be diversified away by investing in both Cathay Sustainability and Cathay TAIEX 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 Sustainability and Cathay TAIEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Sustainability High and Cathay TAIEX Daily, you can compare the effects of market volatilities on Cathay Sustainability and Cathay TAIEX 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 Sustainability with a short position of Cathay TAIEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Sustainability and Cathay TAIEX.
Diversification Opportunities for Cathay Sustainability and Cathay TAIEX
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and Cathay is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Sustainability High and Cathay TAIEX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay TAIEX Daily and Cathay Sustainability 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 Sustainability High are associated (or correlated) with Cathay TAIEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay TAIEX Daily has no effect on the direction of Cathay Sustainability i.e., Cathay Sustainability and Cathay TAIEX go up and down completely randomly.
Pair Corralation between Cathay Sustainability and Cathay TAIEX
Assuming the 90 days trading horizon Cathay Sustainability High is expected to generate 0.59 times more return on investment than Cathay TAIEX. However, Cathay Sustainability High is 1.68 times less risky than Cathay TAIEX. It trades about 0.63 of its potential returns per unit of risk. Cathay TAIEX Daily is currently generating about -0.3 per unit of risk. If you would invest 2,167 in Cathay Sustainability High on November 27, 2024 and sell it today you would earn a total of 97.00 from holding Cathay Sustainability High or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Sustainability High vs. Cathay TAIEX Daily
Performance |
| Timeline |
| Cathay Sustainability |
| Cathay TAIEX Daily |
Cathay Sustainability and Cathay TAIEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Sustainability and Cathay TAIEX
The main advantage of trading using opposite Cathay Sustainability and Cathay TAIEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Sustainability position performs unexpectedly, Cathay TAIEX 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 TAIEX will offset losses from the drop in Cathay TAIEX's long position.| Cathay Sustainability vs. Cathay TIP TAIEX | Cathay Sustainability vs. Cathay Nasdaq AI | Cathay Sustainability vs. Cathay Dow Jones | Cathay Sustainability vs. Cathay Bloomberg Barclays |
| Cathay TAIEX vs. Cathay TIP TAIEX | Cathay TAIEX vs. Cathay Nasdaq AI | Cathay TAIEX vs. Cathay Dow Jones | Cathay TAIEX 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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