Correlation Between Cathay Financial and CVC Technologies
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and CVC Technologies 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 CVC Technologies 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 CVC Technologies, you can compare the effects of market volatilities on Cathay Financial and CVC Technologies 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 CVC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and CVC Technologies.
Diversification Opportunities for Cathay Financial and CVC Technologies
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cathay and CVC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and CVC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Technologies 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 CVC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Technologies has no effect on the direction of Cathay Financial i.e., Cathay Financial and CVC Technologies go up and down completely randomly.
Pair Corralation between Cathay Financial and CVC Technologies
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.1 times more return on investment than CVC Technologies. However, Cathay Financial Holding is 9.75 times less risky than CVC Technologies. It trades about 0.14 of its potential returns per unit of risk. CVC Technologies is currently generating about -0.01 per unit of risk. If you would invest 5,770 in Cathay Financial Holding on October 26, 2024 and sell it today you would earn a total of 250.00 from holding Cathay Financial Holding or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. CVC Technologies
Performance |
| Timeline |
| Cathay Financial Holding |
| CVC Technologies |
Cathay Financial and CVC Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and CVC Technologies
The main advantage of trading using opposite Cathay Financial and CVC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, CVC Technologies 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 CVC Technologies will offset losses from the drop in CVC Technologies' long position.| Cathay Financial vs. Quanta Storage | Cathay Financial vs. Adata Technology Co | Cathay Financial vs. Tong Hwa Synthetic Fiber | Cathay Financial vs. Johnson Chemical Pharmaceutical |
| CVC Technologies vs. Yuanta Financial Holdings | CVC Technologies vs. Cathay Financial Holding | CVC Technologies vs. Shin Kong Financial | CVC Technologies vs. Chien Kuo Construction |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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