Correlation Between Cathay Financial and Mildef Crete
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Mildef Crete 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 Mildef Crete 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 Mildef Crete, you can compare the effects of market volatilities on Cathay Financial and Mildef Crete 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 Mildef Crete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Mildef Crete.
Diversification Opportunities for Cathay Financial and Mildef Crete
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and Mildef is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Mildef Crete in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mildef Crete 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 Mildef Crete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mildef Crete has no effect on the direction of Cathay Financial i.e., Cathay Financial and Mildef Crete go up and down completely randomly.
Pair Corralation between Cathay Financial and Mildef Crete
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.19 times more return on investment than Mildef Crete. However, Cathay Financial Holding is 5.36 times less risky than Mildef Crete. It trades about 0.2 of its potential returns per unit of risk. Mildef Crete is currently generating about -0.4 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. Mildef Crete
Performance |
| Timeline |
| Cathay Financial Holding |
| Mildef Crete |
Cathay Financial and Mildef Crete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Mildef Crete
The main advantage of trading using opposite Cathay Financial and Mildef Crete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Mildef Crete 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 Mildef Crete will offset losses from the drop in Mildef Crete'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 |
| Mildef Crete vs. Medigen Biotechnology | Mildef Crete vs. Wei Chuan Foods | Mildef Crete vs. Otsuka Information Technology | Mildef Crete vs. Golden Biotechnology |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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