Correlation Between Cathay Real and Kuo Yang
Can any of the company-specific risk be diversified away by investing in both Cathay Real and Kuo Yang 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 Real and Kuo Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Real Estate and Kuo Yang Construction, you can compare the effects of market volatilities on Cathay Real and Kuo Yang 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 Real with a short position of Kuo Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Real and Kuo Yang.
Diversification Opportunities for Cathay Real and Kuo Yang
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cathay and Kuo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Real Estate and Kuo Yang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuo Yang Construction and Cathay Real 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 Real Estate are associated (or correlated) with Kuo Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuo Yang Construction has no effect on the direction of Cathay Real i.e., Cathay Real and Kuo Yang go up and down completely randomly.
Pair Corralation between Cathay Real and Kuo Yang
Assuming the 90 days trading horizon Cathay Real Estate is expected to under-perform the Kuo Yang. In addition to that, Cathay Real is 1.11 times more volatile than Kuo Yang Construction. It trades about -0.28 of its total potential returns per unit of risk. Kuo Yang Construction is currently generating about 0.03 per unit of volatility. If you would invest 2,255 in Kuo Yang Construction on October 9, 2024 and sell it today you would earn a total of 15.00 from holding Kuo Yang Construction or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Real Estate vs. Kuo Yang Construction
Performance |
| Timeline |
| Cathay Real Estate |
| Kuo Yang Construction |
Cathay Real and Kuo Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Real and Kuo Yang
The main advantage of trading using opposite Cathay Real and Kuo Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Real position performs unexpectedly, Kuo Yang 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 Kuo Yang will offset losses from the drop in Kuo Yang's long position.| Cathay Real vs. Shining Building Business | Cathay Real vs. Chong Hong Construction | Cathay Real vs. Farglory Land Development | Cathay Real vs. Sweeten Real Estate |
| Kuo Yang vs. Kindom Construction Corp | Kuo Yang vs. Cathay Real Estate | Kuo Yang vs. Highwealth Construction Corp | Kuo Yang vs. Hung Sheng Construction |
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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