Correlation Between Cathay Financial and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Nan Ya 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 Financial and Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Financial Holding and Nan Ya Plastics, you can compare the effects of market volatilities on Cathay Financial and Nan Ya 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 Financial with a short position of Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Nan Ya.
Diversification Opportunities for Cathay Financial and Nan Ya
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cathay and Nan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Nan Ya Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Plastics and Cathay Financial 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 Financial Holding are associated (or correlated) with Nan Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Ya Plastics has no effect on the direction of Cathay Financial i.e., Cathay Financial and Nan Ya go up and down completely randomly.
Pair Corralation between Cathay Financial and Nan Ya
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.53 times more return on investment than Nan Ya. However, Cathay Financial Holding is 1.88 times less risky than Nan Ya. It trades about -0.15 of its potential returns per unit of risk. Nan Ya Plastics is currently generating about -0.12 per unit of risk. If you would invest 6,930 in Cathay Financial Holding on August 28, 2024 and sell it today you would lose (200.00) from holding Cathay Financial Holding or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Nan Ya Plastics
Performance |
| Timeline |
| Cathay Financial Holding |
| Nan Ya Plastics |
Cathay Financial and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Nan Ya
The main advantage of trading using opposite Cathay Financial and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Nan Ya 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 Nan Ya will offset losses from the drop in Nan Ya's long position.| Cathay Financial vs. Fubon Financial Holding | Cathay Financial vs. CTBC Financial Holding | Cathay Financial vs. Mega Financial Holding | Cathay Financial vs. First Financial Holding |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |