Correlation Between Da Cin and Cathay Real
Can any of the company-specific risk be diversified away by investing in both Da Cin and Cathay Real 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 Da Cin and Cathay Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Da Cin Construction Co and Cathay Real Estate, you can compare the effects of market volatilities on Da Cin and Cathay Real 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 Da Cin with a short position of Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Cin and Cathay Real.
Diversification Opportunities for Da Cin and Cathay Real
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 2535 and Cathay is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Da Cin Construction Co and Cathay Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Real Estate and Da Cin 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 Da Cin Construction Co are associated (or correlated) with Cathay Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Real Estate has no effect on the direction of Da Cin i.e., Da Cin and Cathay Real go up and down completely randomly.
Pair Corralation between Da Cin and Cathay Real
Assuming the 90 days trading horizon Da Cin Construction Co is expected to generate 0.96 times more return on investment than Cathay Real. However, Da Cin Construction Co is 1.05 times less risky than Cathay Real. It trades about 0.22 of its potential returns per unit of risk. Cathay Real Estate is currently generating about -0.21 per unit of risk. If you would invest 5,010 in Da Cin Construction Co on November 3, 2024 and sell it today you would earn a total of 490.00 from holding Da Cin Construction Co or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Da Cin Construction Co vs. Cathay Real Estate
Performance |
| Timeline |
| Da Cin Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Cathay Real Estate |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Da Cin and Cathay Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Da Cin and Cathay Real
The main advantage of trading using opposite Da Cin and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Da Cin position performs unexpectedly, Cathay Real 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 Real will offset losses from the drop in Cathay Real's long position.The idea behind Da Cin Construction Co and Cathay Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |