Correlation Between Cathay Chemical and Apex Biotechnology
Can any of the company-specific risk be diversified away by investing in both Cathay Chemical and Apex Biotechnology 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 Chemical and Apex Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Chemical Works and Apex Biotechnology Corp, you can compare the effects of market volatilities on Cathay Chemical and Apex Biotechnology 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 Chemical with a short position of Apex Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Chemical and Apex Biotechnology.
Diversification Opportunities for Cathay Chemical and Apex Biotechnology
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and Apex is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Chemical Works and Apex Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Biotechnology Corp and Cathay Chemical 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 Chemical Works are associated (or correlated) with Apex Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Biotechnology Corp has no effect on the direction of Cathay Chemical i.e., Cathay Chemical and Apex Biotechnology go up and down completely randomly.
Pair Corralation between Cathay Chemical and Apex Biotechnology
Assuming the 90 days trading horizon Cathay Chemical Works is expected to under-perform the Apex Biotechnology. In addition to that, Cathay Chemical is 1.69 times more volatile than Apex Biotechnology Corp. It trades about -0.17 of its total potential returns per unit of risk. Apex Biotechnology Corp is currently generating about -0.18 per unit of volatility. If you would invest 2,925 in Apex Biotechnology Corp on August 26, 2024 and sell it today you would lose (75.00) from holding Apex Biotechnology Corp or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Chemical Works vs. Apex Biotechnology Corp
Performance |
| Timeline |
| Cathay Chemical Works |
| Apex Biotechnology Corp |
Cathay Chemical and Apex Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Chemical and Apex Biotechnology
The main advantage of trading using opposite Cathay Chemical and Apex Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Chemical position performs unexpectedly, Apex Biotechnology 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 Apex Biotechnology will offset losses from the drop in Apex Biotechnology's long position.| Cathay Chemical vs. Chung Hwa Chemical | Cathay Chemical vs. China Man Made Fiber | Cathay Chemical vs. Sesoda Corp | Cathay Chemical vs. Everlight Chemical Industrial |
| Apex Biotechnology vs. Grape King Bio | Apex Biotechnology vs. Standard Chemical Pharmaceutical | Apex Biotechnology vs. China Steel Chemical | Apex Biotechnology vs. Sinphar Pharmaceutical Co |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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