Correlation Between Cathay Financial and Yuanta Futures
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Yuanta Futures 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 Yuanta Futures 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 Yuanta Futures Co, you can compare the effects of market volatilities on Cathay Financial and Yuanta Futures 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 Yuanta Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Yuanta Futures.
Diversification Opportunities for Cathay Financial and Yuanta Futures
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and Yuanta is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Yuanta Futures Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Futures 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 Yuanta Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Futures has no effect on the direction of Cathay Financial i.e., Cathay Financial and Yuanta Futures go up and down completely randomly.
Pair Corralation between Cathay Financial and Yuanta Futures
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.3 times more return on investment than Yuanta Futures. However, Cathay Financial Holding is 3.31 times less risky than Yuanta Futures. It trades about 0.2 of its potential returns per unit of risk. Yuanta Futures Co is currently generating about 0.06 per unit of risk. If you would invest 6,060 in Cathay Financial Holding on September 13, 2024 and sell it today you would earn a total of 50.00 from holding Cathay Financial Holding or generate 0.83% 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. Yuanta Futures Co
Performance |
| Timeline |
| Cathay Financial Holding |
| Yuanta Futures |
Cathay Financial and Yuanta Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Yuanta Futures
The main advantage of trading using opposite Cathay Financial and Yuanta Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Yuanta Futures 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 Yuanta Futures will offset losses from the drop in Yuanta Futures' long position.| Cathay Financial vs. C Media Electronics | Cathay Financial vs. Holiday Entertainment Co | Cathay Financial vs. IBF Financial Holdings | Cathay Financial vs. Shinkong Insurance Co |
| Yuanta Futures vs. Cameo Communications | Yuanta Futures vs. Dimerco Data System | Yuanta Futures vs. Otsuka Information Technology | Yuanta Futures vs. STARLUX Airlines Co |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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