Correlation Between Chinese Maritime and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Chinese Maritime and Cathay Financial 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 Chinese Maritime and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chinese Maritime Transport and Cathay Financial Holding, you can compare the effects of market volatilities on Chinese Maritime and Cathay Financial 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 Chinese Maritime with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Maritime and Cathay Financial.
Diversification Opportunities for Chinese Maritime and Cathay Financial
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chinese and Cathay is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Maritime Transport and Cathay Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Financial Holding and Chinese Maritime 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 Chinese Maritime Transport are associated (or correlated) with Cathay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Financial Holding has no effect on the direction of Chinese Maritime i.e., Chinese Maritime and Cathay Financial go up and down completely randomly.
Pair Corralation between Chinese Maritime and Cathay Financial
Assuming the 90 days trading horizon Chinese Maritime Transport is expected to generate 5.27 times more return on investment than Cathay Financial. However, Chinese Maritime is 5.27 times more volatile than Cathay Financial Holding. It trades about 0.01 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.04 per unit of risk. If you would invest 3,870 in Chinese Maritime Transport on October 31, 2024 and sell it today you would earn a total of 90.00 from holding Chinese Maritime Transport or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chinese Maritime Transport vs. Cathay Financial Holding
Performance |
| Timeline |
| Chinese Maritime Tra |
| Cathay Financial Holding |
Chinese Maritime and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chinese Maritime and Cathay Financial
The main advantage of trading using opposite Chinese Maritime and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Maritime position performs unexpectedly, Cathay Financial 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 Financial will offset losses from the drop in Cathay Financial's long position.| Chinese Maritime vs. U Ming Marine Transport | Chinese Maritime vs. Sincere Navigation Corp | Chinese Maritime vs. Taiwan Navigation Co | Chinese Maritime vs. Huaku Development Co |
| Cathay Financial vs. Level Biotechnology | Cathay Financial vs. Chinese Maritime Transport | Cathay Financial vs. Chung Lien Transportation | Cathay Financial vs. Asmedia Technology |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |