Correlation Between Cathay Sustainability and Fuh Hwa
Can any of the company-specific risk be diversified away by investing in both Cathay Sustainability and Fuh Hwa 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 Fuh Hwa 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 Fuh Hwa 1 5, you can compare the effects of market volatilities on Cathay Sustainability and Fuh Hwa 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 Fuh Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Sustainability and Fuh Hwa.
Diversification Opportunities for Cathay Sustainability and Fuh Hwa
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cathay and Fuh is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Sustainability High and Fuh Hwa 1 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuh Hwa 1 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 Fuh Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuh Hwa 1 has no effect on the direction of Cathay Sustainability i.e., Cathay Sustainability and Fuh Hwa go up and down completely randomly.
Pair Corralation between Cathay Sustainability and Fuh Hwa
Assuming the 90 days trading horizon Cathay Sustainability High is expected to generate 3.3 times more return on investment than Fuh Hwa. However, Cathay Sustainability is 3.3 times more volatile than Fuh Hwa 1 5. It trades about 0.06 of its potential returns per unit of risk. Fuh Hwa 1 5 is currently generating about 0.08 per unit of risk. If you would invest 1,877 in Cathay Sustainability High on September 2, 2024 and sell it today you would earn a total of 299.00 from holding Cathay Sustainability High or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Sustainability High vs. Fuh Hwa 1 5
Performance |
| Timeline |
| Cathay Sustainability |
| Fuh Hwa 1 |
Cathay Sustainability and Fuh Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Sustainability and Fuh Hwa
The main advantage of trading using opposite Cathay Sustainability and Fuh Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Sustainability position performs unexpectedly, Fuh Hwa 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 Fuh Hwa will offset losses from the drop in Fuh Hwa's long position.| Cathay Sustainability vs. Yuanta Daily CSI | Cathay Sustainability vs. Fubon FTSE Vietnam | Cathay Sustainability vs. Paradigm SP GSCI |
| Fuh Hwa vs. Fuh Hwa Taiwan | Fuh Hwa vs. Fuh Hwa Daily | Fuh Hwa vs. Fuh Hwa Daily | Fuh Hwa vs. Fuh Hwa FTSE |
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 Stocks Directory module to find actively traded stocks across global markets.
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