Correlation Between Huang Hsiang and Cathay Real
Can any of the company-specific risk be diversified away by investing in both Huang Hsiang 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 Huang Hsiang and Cathay Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huang Hsiang Construction and Cathay Real Estate, you can compare the effects of market volatilities on Huang Hsiang 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 Huang Hsiang with a short position of Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huang Hsiang and Cathay Real.
Diversification Opportunities for Huang Hsiang and Cathay Real
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huang and Cathay is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Huang Hsiang Construction 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 Huang Hsiang 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 Huang Hsiang Construction 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 Huang Hsiang i.e., Huang Hsiang and Cathay Real go up and down completely randomly.
Pair Corralation between Huang Hsiang and Cathay Real
Assuming the 90 days trading horizon Huang Hsiang Construction is expected to generate 1.1 times more return on investment than Cathay Real. However, Huang Hsiang is 1.1 times more volatile than Cathay Real Estate. It trades about -0.04 of its potential returns per unit of risk. Cathay Real Estate is currently generating about -0.15 per unit of risk. If you would invest 6,270 in Huang Hsiang Construction on October 20, 2024 and sell it today you would lose (80.00) from holding Huang Hsiang Construction or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huang Hsiang Construction vs. Cathay Real Estate
Performance |
| Timeline |
| Huang Hsiang Construction |
| Cathay Real Estate |
Huang Hsiang and Cathay Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huang Hsiang and Cathay Real
The main advantage of trading using opposite Huang Hsiang and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huang Hsiang 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.| Huang Hsiang vs. Highwealth Construction Corp | Huang Hsiang vs. Huaku Development Co | Huang Hsiang vs. Kindom Construction Corp | Huang Hsiang vs. Cathay Real Estate |
| Cathay Real vs. Cathay Financial Holding | Cathay Real vs. Nan Ya Plastics | Cathay Real vs. Chang Hwa Commercial | Cathay Real vs. China Development Financial |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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