Correlation Between Cathay Financial and All Ring
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and All Ring 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 All Ring 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 All Ring Tech, you can compare the effects of market volatilities on Cathay Financial and All Ring 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 All Ring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and All Ring.
Diversification Opportunities for Cathay Financial and All Ring
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and All is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and All Ring Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Ring Tech 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 All Ring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Ring Tech has no effect on the direction of Cathay Financial i.e., Cathay Financial and All Ring go up and down completely randomly.
Pair Corralation between Cathay Financial and All Ring
Assuming the 90 days trading horizon Cathay Financial is expected to generate 3.53 times less return on investment than All Ring. But when comparing it to its historical volatility, Cathay Financial Holding is 2.99 times less risky than All Ring. It trades about 0.09 of its potential returns per unit of risk. All Ring Tech is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 37,150 in All Ring Tech on August 29, 2024 and sell it today you would earn a total of 8,650 from holding All Ring Tech or generate 23.28% 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. All Ring Tech
Performance |
| Timeline |
| Cathay Financial Holding |
| All Ring Tech |
Cathay Financial and All Ring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and All Ring
The main advantage of trading using opposite Cathay Financial and All Ring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, All Ring 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 All Ring will offset losses from the drop in All Ring's long position.| Cathay Financial vs. Taiwan Secom Co | Cathay Financial vs. TTET Union Corp | Cathay Financial vs. China Steel Chemical | Cathay Financial vs. Taiwan Shin Kong |
| All Ring vs. Strong H Machinery | All Ring vs. Roundtop Machinery Industries | All Ring vs. Simple Mart Retail | All Ring vs. Trade Van Information Services |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |