Correlation Between Cathay Financial and Sunfun Info
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Sunfun Info 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 Sunfun Info 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 Sunfun Info Co, you can compare the effects of market volatilities on Cathay Financial and Sunfun Info 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 Sunfun Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Sunfun Info.
Diversification Opportunities for Cathay Financial and Sunfun Info
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cathay and Sunfun is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Sunfun Info Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfun Info 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 Sunfun Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfun Info has no effect on the direction of Cathay Financial i.e., Cathay Financial and Sunfun Info go up and down completely randomly.
Pair Corralation between Cathay Financial and Sunfun Info
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.01 times more return on investment than Sunfun Info. However, Cathay Financial Holding is 95.65 times less risky than Sunfun Info. It trades about 0.27 of its potential returns per unit of risk. Sunfun Info Co is currently generating about -0.19 per unit of risk. If you would invest 5,920 in Cathay Financial Holding on September 1, 2024 and sell it today you would earn a total of 80.00 from holding Cathay Financial Holding or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Sunfun Info Co
Performance |
| Timeline |
| Cathay Financial Holding |
| Sunfun Info |
Cathay Financial and Sunfun Info Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Sunfun Info
The main advantage of trading using opposite Cathay Financial and Sunfun Info positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Sunfun Info 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 Sunfun Info will offset losses from the drop in Sunfun Info's long position.| Cathay Financial vs. MedFirst Healthcare Services | Cathay Financial vs. Great China Metal | Cathay Financial vs. Chernan Metal Industrial | Cathay Financial vs. Simple Mart Retail |
| Sunfun Info vs. Fortune Information Systems | Sunfun Info vs. Dadi Early Childhood Education | Sunfun Info vs. Simple Mart Retail | Sunfun Info vs. Datavan International |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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