Correlation Between Cathay Financial and Energenesis Biomedical
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Energenesis Biomedical 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 Energenesis Biomedical 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 Energenesis Biomedical Co, you can compare the effects of market volatilities on Cathay Financial and Energenesis Biomedical 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 Energenesis Biomedical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Energenesis Biomedical.
Diversification Opportunities for Cathay Financial and Energenesis Biomedical
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cathay and Energenesis is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Energenesis Biomedical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energenesis Biomedical 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 Energenesis Biomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energenesis Biomedical has no effect on the direction of Cathay Financial i.e., Cathay Financial and Energenesis Biomedical go up and down completely randomly.
Pair Corralation between Cathay Financial and Energenesis Biomedical
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.07 times more return on investment than Energenesis Biomedical. However, Cathay Financial Holding is 14.32 times less risky than Energenesis Biomedical. It trades about 0.05 of its potential returns per unit of risk. Energenesis Biomedical Co is currently generating about -0.07 per unit of risk. If you would invest 6,000 in Cathay Financial Holding on October 30, 2024 and sell it today you would earn a total of 20.00 from holding Cathay Financial Holding or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Energenesis Biomedical Co
Performance |
| Timeline |
| Cathay Financial Holding |
| Energenesis Biomedical |
Cathay Financial and Energenesis Biomedical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Energenesis Biomedical
The main advantage of trading using opposite Cathay Financial and Energenesis Biomedical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Energenesis Biomedical 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 Energenesis Biomedical will offset losses from the drop in Energenesis Biomedical's long position.| Cathay Financial vs. Wha Yu Industrial | Cathay Financial vs. Aerospace Industrial Development | Cathay Financial vs. Chailease Holding Co | Cathay Financial vs. Song Ho Industrial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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