Correlation Between Cathay Taiwan and Capital Nasdaq
Can any of the company-specific risk be diversified away by investing in both Cathay Taiwan and Capital Nasdaq 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 Taiwan and Capital Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Taiwan 5G and Capital Nasdaq Biotechnology, you can compare the effects of market volatilities on Cathay Taiwan and Capital Nasdaq 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 Taiwan with a short position of Capital Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Taiwan and Capital Nasdaq.
Diversification Opportunities for Cathay Taiwan and Capital Nasdaq
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cathay and Capital is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Taiwan 5G and Capital Nasdaq Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Nasdaq Biote and Cathay Taiwan 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 Taiwan 5G are associated (or correlated) with Capital Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Nasdaq Biote has no effect on the direction of Cathay Taiwan i.e., Cathay Taiwan and Capital Nasdaq go up and down completely randomly.
Pair Corralation between Cathay Taiwan and Capital Nasdaq
Assuming the 90 days trading horizon Cathay Taiwan 5G is expected to generate 0.92 times more return on investment than Capital Nasdaq. However, Cathay Taiwan 5G is 1.09 times less risky than Capital Nasdaq. It trades about 0.02 of its potential returns per unit of risk. Capital Nasdaq Biotechnology is currently generating about -0.04 per unit of risk. If you would invest 2,420 in Cathay Taiwan 5G on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Cathay Taiwan 5G or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cathay Taiwan 5G vs. Capital Nasdaq Biotechnology
Performance |
| Timeline |
| Cathay Taiwan 5G |
| Capital Nasdaq Biote |
Cathay Taiwan and Capital Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Taiwan and Capital Nasdaq
The main advantage of trading using opposite Cathay Taiwan and Capital Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Taiwan position performs unexpectedly, Capital Nasdaq 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 Capital Nasdaq will offset losses from the drop in Capital Nasdaq's long position.| Cathay Taiwan vs. YuantaP shares Taiwan Top | Cathay Taiwan vs. Yuanta Daily Taiwan | Cathay Taiwan vs. Yuanta Daily CSI | Cathay Taiwan vs. Cathay Sustainability High |
| Capital Nasdaq vs. YuantaP shares Taiwan Top | Capital Nasdaq vs. Yuanta Daily Taiwan | Capital Nasdaq vs. Cathay Taiwan 5G | Capital Nasdaq vs. Yuanta Daily CSI |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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