Correlation Between Cathay Taiwan and Giant Manufacturing
Can any of the company-specific risk be diversified away by investing in both Cathay Taiwan and Giant Manufacturing 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 Giant Manufacturing 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 Giant Manufacturing Co, you can compare the effects of market volatilities on Cathay Taiwan and Giant Manufacturing 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 Giant Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Taiwan and Giant Manufacturing.
Diversification Opportunities for Cathay Taiwan and Giant Manufacturing
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and Giant is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Taiwan 5G and Giant Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giant Manufacturing 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 Giant Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giant Manufacturing has no effect on the direction of Cathay Taiwan i.e., Cathay Taiwan and Giant Manufacturing go up and down completely randomly.
Pair Corralation between Cathay Taiwan and Giant Manufacturing
Assuming the 90 days trading horizon Cathay Taiwan 5G is expected to generate 0.55 times more return on investment than Giant Manufacturing. However, Cathay Taiwan 5G is 1.82 times less risky than Giant Manufacturing. It trades about -0.02 of its potential returns per unit of risk. Giant Manufacturing Co is currently generating about -0.2 per unit of risk. If you would invest 2,469 in Cathay Taiwan 5G on September 13, 2024 and sell it today you would lose (14.00) from holding Cathay Taiwan 5G or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Taiwan 5G vs. Giant Manufacturing Co
Performance |
| Timeline |
| Cathay Taiwan 5G |
| Giant Manufacturing |
Cathay Taiwan and Giant Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Taiwan and Giant Manufacturing
The main advantage of trading using opposite Cathay Taiwan and Giant Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Taiwan position performs unexpectedly, Giant Manufacturing 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 Giant Manufacturing will offset losses from the drop in Giant Manufacturing'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 |
| Giant Manufacturing vs. Feng Tay Enterprises | Giant Manufacturing vs. Ruentex Development Co | Giant Manufacturing vs. WiseChip Semiconductor | Giant Manufacturing vs. Novatek Microelectronics Corp |
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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