Correlation Between Cathay Global and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both Cathay Global and YuantaP Shares 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 Global and YuantaP Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Global Autonomous and YuantaP shares Taiwan Top, you can compare the effects of market volatilities on Cathay Global and YuantaP Shares 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 Global with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Global and YuantaP Shares.
Diversification Opportunities for Cathay Global and YuantaP Shares
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and YuantaP is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Global Autonomous and YuantaP shares Taiwan Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Cathay Global 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 Global Autonomous are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of Cathay Global i.e., Cathay Global and YuantaP Shares go up and down completely randomly.
Pair Corralation between Cathay Global and YuantaP Shares
Assuming the 90 days trading horizon Cathay Global is expected to generate 1.07 times less return on investment than YuantaP Shares. In addition to that, Cathay Global is 1.12 times more volatile than YuantaP shares Taiwan Top. It trades about 0.09 of its total potential returns per unit of risk. YuantaP shares Taiwan Top is currently generating about 0.11 per unit of volatility. If you would invest 12,741 in YuantaP shares Taiwan Top on September 3, 2024 and sell it today you would earn a total of 5,984 from holding YuantaP shares Taiwan Top or generate 46.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.93% |
| Values | Daily Returns |
Cathay Global Autonomous vs. YuantaP shares Taiwan Top
Performance |
| Timeline |
| Cathay Global Autonomous |
| YuantaP shares Taiwan |
Cathay Global and YuantaP Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Global and YuantaP Shares
The main advantage of trading using opposite Cathay Global and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Global position performs unexpectedly, YuantaP Shares 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 YuantaP Shares will offset losses from the drop in YuantaP Shares' long position.| Cathay Global vs. Cathay TIP TAIEX | Cathay Global vs. Cathay Nasdaq AI | Cathay Global vs. Cathay Dow Jones | Cathay Global vs. Cathay Bloomberg Barclays |
| YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Ruentex Development Co | YuantaP Shares vs. Symtek Automation Asia | YuantaP Shares vs. CTCI 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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