Correlation Between Cathay Sustainability and CTBC 20
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By analyzing existing cross correlation between Cathay Sustainability High and CTBC 20 Year, you can compare the effects of market volatilities on Cathay Sustainability and CTBC 20 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 CTBC 20. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Sustainability and CTBC 20.
Diversification Opportunities for Cathay Sustainability and CTBC 20
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cathay and CTBC is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Sustainability High and CTBC 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC 20 Year 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 CTBC 20. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC 20 Year has no effect on the direction of Cathay Sustainability i.e., Cathay Sustainability and CTBC 20 go up and down completely randomly.
Pair Corralation between Cathay Sustainability and CTBC 20
Assuming the 90 days trading horizon Cathay Sustainability High is expected to generate 1.78 times more return on investment than CTBC 20. However, Cathay Sustainability is 1.78 times more volatile than CTBC 20 Year. It trades about 0.06 of its potential returns per unit of risk. CTBC 20 Year is currently generating about 0.04 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Sustainability High vs. CTBC 20 Year
Performance |
| Timeline |
| Cathay Sustainability |
| CTBC 20 Year |
Cathay Sustainability and CTBC 20 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Sustainability and CTBC 20
The main advantage of trading using opposite Cathay Sustainability and CTBC 20 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Sustainability position performs unexpectedly, CTBC 20 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 CTBC 20 will offset losses from the drop in CTBC 20's long position.The idea behind Cathay Sustainability High and CTBC 20 Year pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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