Correlation Between Cathay Real and Delpha Construction
Can any of the company-specific risk be diversified away by investing in both Cathay Real and Delpha 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 Delpha 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 Delpha Construction Co, you can compare the effects of market volatilities on Cathay Real and Delpha 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 Delpha Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Real and Delpha Construction.
Diversification Opportunities for Cathay Real and Delpha Construction
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cathay and Delpha is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Real Estate and Delpha Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delpha 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 Delpha Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delpha Construction has no effect on the direction of Cathay Real i.e., Cathay Real and Delpha Construction go up and down completely randomly.
Pair Corralation between Cathay Real and Delpha Construction
Assuming the 90 days trading horizon Cathay Real Estate is expected to generate 1.05 times more return on investment than Delpha Construction. However, Cathay Real is 1.05 times more volatile than Delpha Construction Co. It trades about -0.08 of its potential returns per unit of risk. Delpha Construction Co is currently generating about -0.13 per unit of risk. If you would invest 2,855 in Cathay Real Estate on August 30, 2024 and sell it today you would lose (295.00) from holding Cathay Real Estate or give up 10.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Real Estate vs. Delpha Construction Co
Performance |
| Timeline |
| Cathay Real Estate |
| Delpha Construction |
Cathay Real and Delpha Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Real and Delpha Construction
The main advantage of trading using opposite Cathay Real and Delpha Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Real position performs unexpectedly, Delpha 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 Delpha Construction will offset losses from the drop in Delpha Construction's long position.| Cathay Real vs. Cathay Financial Holding | Cathay Real vs. Nan Ya Plastics | Cathay Real vs. Chang Hwa Commercial | Cathay Real vs. China Development Financial |
| Delpha Construction vs. BES Engineering Co | Delpha Construction vs. Kindom Construction Corp | Delpha Construction vs. Hung Sheng Construction | Delpha Construction vs. Cathay Real Estate |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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