Correlation Between Cathay Financial and JSL Construction
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and JSL Construction 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 JSL Construction 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 JSL Construction Development, you can compare the effects of market volatilities on Cathay Financial and JSL Construction 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 JSL Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and JSL Construction.
Diversification Opportunities for Cathay Financial and JSL Construction
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and JSL is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and JSL Construction Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSL Construction Dev 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 JSL Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSL Construction Dev has no effect on the direction of Cathay Financial i.e., Cathay Financial and JSL Construction go up and down completely randomly.
Pair Corralation between Cathay Financial and JSL Construction
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.11 times more return on investment than JSL Construction. However, Cathay Financial Holding is 8.82 times less risky than JSL Construction. It trades about 0.2 of its potential returns per unit of risk. JSL Construction Development is currently generating about 0.01 per unit of risk. If you would invest 5,930 in Cathay Financial Holding on August 30, 2024 and sell it today you would earn a total of 60.00 from holding Cathay Financial Holding or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. JSL Construction Development
Performance |
| Timeline |
| Cathay Financial Holding |
| JSL Construction Dev |
Cathay Financial and JSL Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and JSL Construction
The main advantage of trading using opposite Cathay Financial and JSL Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, JSL Construction 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 JSL Construction will offset losses from the drop in JSL Construction's long position.| Cathay Financial vs. Daxin Materials Corp | Cathay Financial vs. Solar Applied Materials | Cathay Financial vs. Shinkong Insurance Co | Cathay Financial vs. Mega Financial Holding |
| JSL Construction vs. Tainan Spinning Co | JSL Construction vs. Carnival Industrial Corp | JSL Construction vs. Symtek Automation Asia | JSL Construction vs. CTCI Corp |
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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