Correlation Between Cathay Financial and SuperAlloy Industrial
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and SuperAlloy Industrial 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 SuperAlloy Industrial 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 SuperAlloy Industrial Co,, you can compare the effects of market volatilities on Cathay Financial and SuperAlloy Industrial 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 SuperAlloy Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and SuperAlloy Industrial.
Diversification Opportunities for Cathay Financial and SuperAlloy Industrial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cathay and SuperAlloy is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and SuperAlloy Industrial Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SuperAlloy Industrial Co, 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 SuperAlloy Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SuperAlloy Industrial Co, has no effect on the direction of Cathay Financial i.e., Cathay Financial and SuperAlloy Industrial go up and down completely randomly.
Pair Corralation between Cathay Financial and SuperAlloy Industrial
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.7 times more return on investment than SuperAlloy Industrial. However, Cathay Financial Holding is 1.43 times less risky than SuperAlloy Industrial. It trades about 0.08 of its potential returns per unit of risk. SuperAlloy Industrial Co, is currently generating about 0.04 per unit of risk. If you would invest 4,095 in Cathay Financial Holding on September 3, 2024 and sell it today you would earn a total of 2,475 from holding Cathay Financial Holding or generate 60.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Cathay Financial Holding vs. SuperAlloy Industrial Co,
Performance |
| Timeline |
| Cathay Financial Holding |
| SuperAlloy Industrial Co, |
Cathay Financial and SuperAlloy Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and SuperAlloy Industrial
The main advantage of trading using opposite Cathay Financial and SuperAlloy Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, SuperAlloy Industrial 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 SuperAlloy Industrial will offset losses from the drop in SuperAlloy Industrial'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 |
| SuperAlloy Industrial vs. Syscom Computer Engineering | SuperAlloy Industrial vs. Far EasTone Telecommunications | SuperAlloy Industrial vs. China Metal Products | SuperAlloy Industrial vs. Sunfar Computer Co |
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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