Correlation Between Cathay Real and Chainqui Construction
Can any of the company-specific risk be diversified away by investing in both Cathay Real and Chainqui Construction 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 Chainqui Construction 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 Chainqui Construction Development, you can compare the effects of market volatilities on Cathay Real and Chainqui Construction 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 Chainqui Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Real and Chainqui Construction.
Diversification Opportunities for Cathay Real and Chainqui Construction
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cathay and Chainqui is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Real Estate and Chainqui Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainqui 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 Chainqui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chainqui Construction has no effect on the direction of Cathay Real i.e., Cathay Real and Chainqui Construction go up and down completely randomly.
Pair Corralation between Cathay Real and Chainqui Construction
Assuming the 90 days trading horizon Cathay Real Estate is expected to generate 1.07 times more return on investment than Chainqui Construction. However, Cathay Real is 1.07 times more volatile than Chainqui Construction Development. It trades about 0.11 of its potential returns per unit of risk. Chainqui Construction Development is currently generating about -0.13 per unit of risk. If you would invest 2,415 in Cathay Real Estate on August 30, 2024 and sell it today you would earn a total of 115.00 from holding Cathay Real Estate or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Real Estate vs. Chainqui Construction Developm
Performance |
| Timeline |
| Cathay Real Estate |
| Chainqui Construction |
Cathay Real and Chainqui Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Real and Chainqui Construction
The main advantage of trading using opposite Cathay Real and Chainqui Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Real position performs unexpectedly, Chainqui Construction 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 Chainqui Construction will offset losses from the drop in Chainqui Construction's long position.| Cathay Real vs. Tainan Spinning Co | Cathay Real vs. Carnival Industrial Corp | Cathay Real vs. Symtek Automation Asia | Cathay Real vs. CTCI Corp |
| Chainqui Construction vs. Yulon Motor Co | Chainqui Construction vs. Far Eastern Department | Chainqui Construction vs. China Steel Corp | Chainqui Construction vs. Chang Hwa Commercial |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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