Correlation Between Cathay Financial and Ruentex Industries
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Ruentex Industries 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 Ruentex Industries 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 Ruentex Industries, you can compare the effects of market volatilities on Cathay Financial and Ruentex Industries 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 Ruentex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Ruentex Industries.
Diversification Opportunities for Cathay Financial and Ruentex Industries
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cathay and Ruentex is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Ruentex Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Industries 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 Ruentex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Industries has no effect on the direction of Cathay Financial i.e., Cathay Financial and Ruentex Industries go up and down completely randomly.
Pair Corralation between Cathay Financial and Ruentex Industries
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.93 times more return on investment than Ruentex Industries. However, Cathay Financial Holding is 1.07 times less risky than Ruentex Industries. It trades about -0.04 of its potential returns per unit of risk. Ruentex Industries is currently generating about -0.13 per unit of risk. If you would invest 6,930 in Cathay Financial Holding on October 26, 2024 and sell it today you would lose (250.00) from holding Cathay Financial Holding or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Ruentex Industries
Performance |
| Timeline |
| Cathay Financial Holding |
| Ruentex Industries |
Cathay Financial and Ruentex Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Ruentex Industries
The main advantage of trading using opposite Cathay Financial and Ruentex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Ruentex Industries 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 Ruentex Industries will offset losses from the drop in Ruentex Industries' 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 |
| Ruentex Industries vs. Ruentex Development Co | Ruentex Industries vs. Fubon Financial Holding | Ruentex Industries vs. Cathay Financial Holding | Ruentex Industries vs. Pou Chen Corp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stocks Directory Find actively traded stocks across global markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |