Correlation Between Cathay Financial and Averlogic Technologies
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Averlogic Technologies 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 Averlogic Technologies 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 Averlogic Technologies, you can compare the effects of market volatilities on Cathay Financial and Averlogic Technologies 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 Averlogic Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Averlogic Technologies.
Diversification Opportunities for Cathay Financial and Averlogic Technologies
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and Averlogic is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Averlogic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Averlogic Technologies 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 Averlogic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Averlogic Technologies has no effect on the direction of Cathay Financial i.e., Cathay Financial and Averlogic Technologies go up and down completely randomly.
Pair Corralation between Cathay Financial and Averlogic Technologies
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.76 times more return on investment than Averlogic Technologies. However, Cathay Financial Holding is 1.31 times less risky than Averlogic Technologies. It trades about 0.08 of its potential returns per unit of risk. Averlogic Technologies is currently generating about -0.13 per unit of risk. If you would invest 5,650 in Cathay Financial Holding on September 3, 2024 and sell it today you would earn a total of 920.00 from holding Cathay Financial Holding or generate 16.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Averlogic Technologies
Performance |
| Timeline |
| Cathay Financial Holding |
| Averlogic Technologies |
Cathay Financial and Averlogic Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Averlogic Technologies
The main advantage of trading using opposite Cathay Financial and Averlogic Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Averlogic Technologies 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 Averlogic Technologies will offset losses from the drop in Averlogic Technologies' 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 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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