Correlation Between Iron Force and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Iron Force and Cathay Financial 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 Iron Force and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Force Industrial and Cathay Financial Holding, you can compare the effects of market volatilities on Iron Force and Cathay Financial 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 Iron Force with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Force and Cathay Financial.
Diversification Opportunities for Iron Force and Cathay Financial
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iron and Cathay is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Iron Force Industrial and Cathay Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Financial Holding and Iron Force 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 Iron Force Industrial are associated (or correlated) with Cathay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Financial Holding has no effect on the direction of Iron Force i.e., Iron Force and Cathay Financial go up and down completely randomly.
Pair Corralation between Iron Force and Cathay Financial
Assuming the 90 days trading horizon Iron Force Industrial is expected to under-perform the Cathay Financial. In addition to that, Iron Force is 6.47 times more volatile than Cathay Financial Holding. It trades about -0.21 of its total potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.04 per unit of volatility. If you would invest 5,940 in Cathay Financial Holding on August 26, 2024 and sell it today you would earn a total of 10.00 from holding Cathay Financial Holding or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Force Industrial vs. Cathay Financial Holding
Performance |
| Timeline |
| Iron Force Industrial |
| Cathay Financial Holding |
Iron Force and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Force and Cathay Financial
The main advantage of trading using opposite Iron Force and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Force position performs unexpectedly, Cathay Financial 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 Cathay Financial will offset losses from the drop in Cathay Financial's long position.| Iron Force vs. Hota Industrial Mfg | Iron Force vs. Cub Elecparts | Iron Force vs. Yulon Nissan Motor | Iron Force vs. Tong Yang Industry |
| Cathay Financial vs. Evergreen International Storage | Cathay Financial vs. Mitake Information | Cathay Financial vs. Far EasTone Telecommunications | Cathay Financial vs. PChome Online |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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