Correlation Between Cathay Financial and Cameo Communications
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Cameo Communications 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 Cameo Communications 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 Cameo Communications, you can compare the effects of market volatilities on Cathay Financial and Cameo Communications 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 Cameo Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Cameo Communications.
Diversification Opportunities for Cathay Financial and Cameo Communications
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and Cameo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications 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 Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of Cathay Financial i.e., Cathay Financial and Cameo Communications go up and down completely randomly.
Pair Corralation between Cathay Financial and Cameo Communications
Assuming the 90 days trading horizon Cathay Financial is expected to generate 12.3 times less return on investment than Cameo Communications. But when comparing it to its historical volatility, Cathay Financial Holding is 5.51 times less risky than Cameo Communications. It trades about 0.02 of its potential returns per unit of risk. Cameo Communications is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 998.00 in Cameo Communications on August 24, 2024 and sell it today you would earn a total of 162.00 from holding Cameo Communications or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Cathay Financial Holding vs. Cameo Communications
Performance |
| Timeline |
| Cathay Financial Holding |
| Cameo Communications |
Cathay Financial and Cameo Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Cameo Communications
The main advantage of trading using opposite Cathay Financial and Cameo Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Cameo Communications 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 Cameo Communications will offset losses from the drop in Cameo Communications' long position.| Cathay Financial vs. Cameo Communications | Cathay Financial vs. Great Computer | Cathay Financial vs. Far EasTone Telecommunications | Cathay Financial vs. U Media Communications |
| Cameo Communications vs. Novatek Microelectronics Corp | Cameo Communications vs. MediaTek | Cameo Communications vs. Quanta Computer | Cameo Communications vs. United Microelectronics |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |