Correlation Between Cathay Financial and Progate
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Progate 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 Progate 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 Progate Group, you can compare the effects of market volatilities on Cathay Financial and Progate 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 Progate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Progate.
Diversification Opportunities for Cathay Financial and Progate
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cathay and Progate is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Progate Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progate Group 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 Progate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progate Group has no effect on the direction of Cathay Financial i.e., Cathay Financial and Progate go up and down completely randomly.
Pair Corralation between Cathay Financial and Progate
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.19 times more return on investment than Progate. However, Cathay Financial Holding is 5.35 times less risky than Progate. It trades about 0.01 of its potential returns per unit of risk. Progate Group is currently generating about -0.11 per unit of risk. If you would invest 6,070 in Cathay Financial Holding on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Cathay Financial Holding or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Progate Group
Performance |
| Timeline |
| Cathay Financial Holding |
| Progate Group |
Cathay Financial and Progate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Progate
The main advantage of trading using opposite Cathay Financial and Progate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Progate 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 Progate will offset losses from the drop in Progate's long position.| Cathay Financial vs. Cathay Financial Holding | Cathay Financial vs. Fubon Financial Holding | Cathay Financial vs. Mercuries Life Insurance | Cathay Financial vs. Mercuries Associates Holding |
| Progate vs. Lian Hwa Foods | Progate vs. Hi Lai Foods Co | Progate vs. Taiwan Mobile Co | Progate vs. Cowealth Medical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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