Correlation Between Cathay Financial and YeaShin International
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and YeaShin 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 YeaShin 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 YeaShin International Development, you can compare the effects of market volatilities on Cathay Financial and YeaShin 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 YeaShin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and YeaShin International.
Diversification Opportunities for Cathay Financial and YeaShin International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and YeaShin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and YeaShin International Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YeaShin 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 YeaShin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YeaShin International has no effect on the direction of Cathay Financial i.e., Cathay Financial and YeaShin International go up and down completely randomly.
Pair Corralation between Cathay Financial and YeaShin International
Assuming the 90 days trading horizon Cathay Financial is expected to generate 16.26 times less return on investment than YeaShin International. But when comparing it to its historical volatility, Cathay Financial Holding is 11.58 times less risky than YeaShin International. It trades about 0.31 of its potential returns per unit of risk. YeaShin International Development is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 3,120 in YeaShin International Development on November 28, 2024 and sell it today you would earn a total of 370.00 from holding YeaShin International Development or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Cathay Financial Holding vs. YeaShin International Developm
Performance |
| Timeline |
| Cathay Financial Holding |
| YeaShin International |
Cathay Financial and YeaShin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and YeaShin International
The main advantage of trading using opposite Cathay Financial and YeaShin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, YeaShin 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 YeaShin International will offset losses from the drop in YeaShin International's long position.| Cathay Financial vs. Mechema Chemicals Int | Cathay Financial vs. Jinan Acetate Chemical | Cathay Financial vs. Double Bond Chemical | Cathay Financial vs. Standard Chemical Pharmaceutical |
| YeaShin International vs. Rich Development Co | YeaShin International vs. Synmosa Biopharma | YeaShin International vs. Fulltech Fiber Glass | YeaShin International vs. Gloria Material 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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