Correlation Between Cathay Financial and Taishin Financial
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Taishin 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 Cathay Financial and Taishin Financial 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 Taishin Financial Holding, you can compare the effects of market volatilities on Cathay Financial and Taishin 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 Cathay Financial with a short position of Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Taishin Financial.
Diversification Opportunities for Cathay Financial and Taishin Financial
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cathay and Taishin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding 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 Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Cathay Financial i.e., Cathay Financial and Taishin Financial go up and down completely randomly.
Pair Corralation between Cathay Financial and Taishin Financial
Assuming the 90 days trading horizon Cathay Financial Holding is expected to under-perform the Taishin Financial. In addition to that, Cathay Financial is 4.09 times more volatile than Taishin Financial Holding. It trades about -0.15 of its total potential returns per unit of risk. Taishin Financial Holding is currently generating about 0.0 per unit of volatility. If you would invest 5,110 in Taishin Financial Holding on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Taishin Financial Holding or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Taishin Financial Holding
Performance |
| Timeline |
| Cathay Financial Holding |
| Taishin Financial Holding |
Cathay Financial and Taishin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Taishin Financial
The main advantage of trading using opposite Cathay Financial and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Taishin 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 Taishin Financial will offset losses from the drop in Taishin Financial'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 |
| Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. Taiwan Cooperative Financial | Taishin Financial vs. ESUN Financial Holding | Taishin Financial vs. Hua Nan 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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