Correlation Between Cathay Financial and Yungshin Construction
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Yungshin Construction 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 Yungshin Construction 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 Yungshin Construction Development, you can compare the effects of market volatilities on Cathay Financial and Yungshin Construction 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 Yungshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Yungshin Construction.
Diversification Opportunities for Cathay Financial and Yungshin Construction
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cathay and Yungshin is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Yungshin Construction Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yungshin Construction 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 Yungshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yungshin Construction has no effect on the direction of Cathay Financial i.e., Cathay Financial and Yungshin Construction go up and down completely randomly.
Pair Corralation between Cathay Financial and Yungshin Construction
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.04 times more return on investment than Yungshin Construction. However, Cathay Financial Holding is 23.01 times less risky than Yungshin Construction. It trades about -0.04 of its potential returns per unit of risk. Yungshin Construction Development is currently generating about -0.17 per unit of risk. If you would invest 6,170 in Cathay Financial Holding on January 22, 2025 and sell it today you would lose (10.00) from holding Cathay Financial Holding or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Yungshin Construction Developm
Performance |
| Timeline |
| Cathay Financial Holding |
| Yungshin Construction |
Cathay Financial and Yungshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Yungshin Construction
The main advantage of trading using opposite Cathay Financial and Yungshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Yungshin Construction 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 Yungshin Construction will offset losses from the drop in Yungshin Construction's long position.| Cathay Financial vs. Great China Metal | Cathay Financial vs. Camellia Metal Co | Cathay Financial vs. Standard Foods Corp | Cathay Financial vs. Chernan Metal Industrial |
| Yungshin Construction vs. Chung Lien Transportation | Yungshin Construction vs. Chumpower Machinery Corp | Yungshin Construction vs. K Laser Technology | Yungshin Construction vs. Arbor 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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