Correlation Between Cathay Financial and Evergreen International
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Evergreen International 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 Evergreen International 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 Evergreen International Storage, you can compare the effects of market volatilities on Cathay Financial and Evergreen International 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 Evergreen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Evergreen International.
Diversification Opportunities for Cathay Financial and Evergreen International
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cathay and Evergreen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Evergreen International Storag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen International 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 Evergreen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen International has no effect on the direction of Cathay Financial i.e., Cathay Financial and Evergreen International go up and down completely randomly.
Pair Corralation between Cathay Financial and Evergreen International
Assuming the 90 days trading horizon Cathay Financial is expected to generate 2.59 times less return on investment than Evergreen International. But when comparing it to its historical volatility, Cathay Financial Holding is 5.39 times less risky than Evergreen International. It trades about 0.05 of its potential returns per unit of risk. Evergreen International Storage is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,755 in Evergreen International Storage on August 26, 2024 and sell it today you would earn a total of 395.00 from holding Evergreen International Storage or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Evergreen International Storag
Performance |
| Timeline |
| Cathay Financial Holding |
| Evergreen International |
Cathay Financial and Evergreen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Evergreen International
The main advantage of trading using opposite Cathay Financial and Evergreen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Evergreen International 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 Evergreen International will offset losses from the drop in Evergreen International's long position.| Cathay Financial vs. Evergreen International Storage | Cathay Financial vs. Mitake Information | Cathay Financial vs. Far EasTone Telecommunications | Cathay Financial vs. PChome Online |
| Evergreen International vs. Sincere Navigation Corp | Evergreen International vs. First Steamship Co | Evergreen International vs. Far Eastern Department | Evergreen International vs. China Container Terminal |
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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