Correlation Between Cathay Financial and Laster Tech
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Laster Tech 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 Laster Tech 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 Laster Tech Corp, you can compare the effects of market volatilities on Cathay Financial and Laster Tech 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 Laster Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Laster Tech.
Diversification Opportunities for Cathay Financial and Laster Tech
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and Laster is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Laster Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laster Tech Corp 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 Laster Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laster Tech Corp has no effect on the direction of Cathay Financial i.e., Cathay Financial and Laster Tech go up and down completely randomly.
Pair Corralation between Cathay Financial and Laster Tech
Assuming the 90 days trading horizon Cathay Financial Holding is expected to under-perform the Laster Tech. But the stock apears to be less risky and, when comparing its historical volatility, Cathay Financial Holding is 1.8 times less risky than Laster Tech. The stock trades about -0.21 of its potential returns per unit of risk. The Laster Tech Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,830 in Laster Tech Corp on September 2, 2024 and sell it today you would earn a total of 80.00 from holding Laster Tech Corp or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Laster Tech Corp
Performance |
| Timeline |
| Cathay Financial Holding |
| Laster Tech Corp |
Cathay Financial and Laster Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Laster Tech
The main advantage of trading using opposite Cathay Financial and Laster Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Laster Tech 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 Laster Tech will offset losses from the drop in Laster Tech'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 |
| Laster Tech vs. Excellence Optoelectronic | Laster Tech vs. Hota Industrial Mfg | Laster Tech vs. Global PMX Co | Laster Tech vs. Cub Elecparts |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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