Correlation Between Cathay Financial and Launch Technologies
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Launch 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 Launch 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 Launch Technologies Co, you can compare the effects of market volatilities on Cathay Financial and Launch 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 Launch Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Launch Technologies.
Diversification Opportunities for Cathay Financial and Launch Technologies
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cathay and Launch is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Launch Technologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch 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 Launch Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch Technologies has no effect on the direction of Cathay Financial i.e., Cathay Financial and Launch Technologies go up and down completely randomly.
Pair Corralation between Cathay Financial and Launch Technologies
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.71 times more return on investment than Launch Technologies. However, Cathay Financial Holding is 1.41 times less risky than Launch Technologies. It trades about 0.08 of its potential returns per unit of risk. Launch Technologies Co is currently generating about -0.11 per unit of risk. If you would invest 4,405 in Cathay Financial Holding on September 2, 2024 and sell it today you would earn a total of 2,165 from holding Cathay Financial Holding or generate 49.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Cathay Financial Holding vs. Launch Technologies Co
Performance |
| Timeline |
| Cathay Financial Holding |
| Launch Technologies |
Cathay Financial and Launch Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Launch Technologies
The main advantage of trading using opposite Cathay Financial and Launch Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Launch 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 Launch Technologies will offset losses from the drop in Launch 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 |
| Launch Technologies vs. An Shin Food Services | Launch Technologies vs. United Radiant Technology | Launch Technologies vs. Microtips Technology | Launch Technologies vs. Voltronic Power Technology |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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