Correlation Between Cathay Financial and Universal Vision
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Universal Vision 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 Universal Vision 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 Universal Vision Biotechnology, you can compare the effects of market volatilities on Cathay Financial and Universal Vision 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 Universal Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Universal Vision.
Diversification Opportunities for Cathay Financial and Universal Vision
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and Universal is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Universal Vision Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Vision Bio 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 Universal Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Vision Bio has no effect on the direction of Cathay Financial i.e., Cathay Financial and Universal Vision go up and down completely randomly.
Pair Corralation between Cathay Financial and Universal Vision
Assuming the 90 days trading horizon Cathay Financial is expected to generate 2.95 times less return on investment than Universal Vision. But when comparing it to its historical volatility, Cathay Financial Holding is 16.6 times less risky than Universal Vision. It trades about 0.07 of its potential returns per unit of risk. Universal Vision Biotechnology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 25,745 in Universal Vision Biotechnology on September 14, 2024 and sell it today you would lose (4,645) from holding Universal Vision Biotechnology or give up 18.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Universal Vision Biotechnology
Performance |
| Timeline |
| Cathay Financial Holding |
| Universal Vision Bio |
Cathay Financial and Universal Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Universal Vision
The main advantage of trading using opposite Cathay Financial and Universal Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Universal Vision 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 Universal Vision will offset losses from the drop in Universal Vision's long position.| Cathay Financial vs. Alchip Technologies | Cathay Financial vs. Materials Analysis Technology | Cathay Financial vs. Microtips Technology | Cathay Financial vs. Sun Max Tech |
| Universal Vision vs. Asmedia Technology | Universal Vision vs. Kinsus Interconnect Technology | Universal Vision vs. Cathay Financial Holding | Universal Vision vs. Chicony Power Technology |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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