Correlation Between Cathay Financial and Nantex Industry
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Nantex Industry 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 Nantex Industry 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 Nantex Industry Co, you can compare the effects of market volatilities on Cathay Financial and Nantex Industry 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 Nantex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Nantex Industry.
Diversification Opportunities for Cathay Financial and Nantex Industry
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cathay and Nantex is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Nantex Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantex Industry 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 Nantex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantex Industry has no effect on the direction of Cathay Financial i.e., Cathay Financial and Nantex Industry go up and down completely randomly.
Pair Corralation between Cathay Financial and Nantex Industry
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.68 times more return on investment than Nantex Industry. However, Cathay Financial Holding is 1.48 times less risky than Nantex Industry. It trades about 0.33 of its potential returns per unit of risk. Nantex Industry Co is currently generating about 0.19 per unit of risk. If you would invest 6,600 in Cathay Financial Holding on November 27, 2024 and sell it today you would earn a total of 270.00 from holding Cathay Financial Holding or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Nantex Industry Co
Performance |
| Timeline |
| Cathay Financial Holding |
| Nantex Industry |
Cathay Financial and Nantex Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Nantex Industry
The main advantage of trading using opposite Cathay Financial and Nantex Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Nantex Industry 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 Nantex Industry will offset losses from the drop in Nantex Industry'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 |
| Nantex Industry vs. International CSRC Investment | Nantex Industry vs. TSRC Corp | Nantex Industry vs. Ruentex Industries | Nantex Industry vs. Cheng Shin Rubber |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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