Correlation Between Cathay Taiwan and Yuanta Global
Can any of the company-specific risk be diversified away by investing in both Cathay Taiwan and Yuanta Global 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 Yuanta Global 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 Yuanta Global NexGen, you can compare the effects of market volatilities on Cathay Taiwan and Yuanta Global 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 Yuanta Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Taiwan and Yuanta Global.
Diversification Opportunities for Cathay Taiwan and Yuanta Global
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cathay and Yuanta is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Taiwan 5G and Yuanta Global NexGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Global NexGen 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 Yuanta Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Global NexGen has no effect on the direction of Cathay Taiwan i.e., Cathay Taiwan and Yuanta Global go up and down completely randomly.
Pair Corralation between Cathay Taiwan and Yuanta Global
Assuming the 90 days trading horizon Cathay Taiwan 5G is expected to generate 0.99 times more return on investment than Yuanta Global. However, Cathay Taiwan 5G is 1.01 times less risky than Yuanta Global. It trades about -0.09 of its potential returns per unit of risk. Yuanta Global NexGen is currently generating about -0.11 per unit of risk. If you would invest 2,431 in Cathay Taiwan 5G on September 1, 2024 and sell it today you would lose (52.00) from holding Cathay Taiwan 5G or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cathay Taiwan 5G vs. Yuanta Global NexGen
Performance |
| Timeline |
| Cathay Taiwan 5G |
| Yuanta Global NexGen |
Cathay Taiwan and Yuanta Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Taiwan and Yuanta Global
The main advantage of trading using opposite Cathay Taiwan and Yuanta Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Taiwan position performs unexpectedly, Yuanta Global 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 Global will offset losses from the drop in Yuanta Global's long position.| Cathay Taiwan vs. Yuanta Daily Taiwan | Cathay Taiwan vs. Yuanta Daily CSI | Cathay Taiwan vs. Fubon FTSE Vietnam | Cathay Taiwan vs. Fuh Hwa Emerging |
| Yuanta Global vs. Yuanta Daily Taiwan | Yuanta Global vs. Cathay Taiwan 5G | Yuanta Global vs. Yuanta Daily CSI | Yuanta Global vs. Fubon FTSE Vietnam |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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