Correlation Between Cathay Financial and Healthconn Corp
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Healthconn Corp 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 Healthconn Corp 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 Healthconn Corp, you can compare the effects of market volatilities on Cathay Financial and Healthconn Corp 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 Healthconn Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Healthconn Corp.
Diversification Opportunities for Cathay Financial and Healthconn Corp
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cathay and Healthconn is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Healthconn Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthconn Corp 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 Healthconn Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthconn Corp has no effect on the direction of Cathay Financial i.e., Cathay Financial and Healthconn Corp go up and down completely randomly.
Pair Corralation between Cathay Financial and Healthconn Corp
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.12 times more return on investment than Healthconn Corp. However, Cathay Financial Holding is 8.38 times less risky than Healthconn Corp. It trades about 0.43 of its potential returns per unit of risk. Healthconn Corp is currently generating about -0.25 per unit of risk. If you would invest 5,880 in Cathay Financial Holding on September 12, 2024 and sell it today you would earn a total of 100.00 from holding Cathay Financial Holding or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cathay Financial Holding vs. Healthconn Corp
Performance |
| Timeline |
| Cathay Financial Holding |
| Healthconn Corp |
Cathay Financial and Healthconn Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathay Financial and Healthconn Corp
The main advantage of trading using opposite Cathay Financial and Healthconn Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Healthconn Corp 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 Healthconn Corp will offset losses from the drop in Healthconn Corp's long position.| Cathay Financial vs. Cathay Financial Holding | Cathay Financial vs. Fubon Financial Holding | Cathay Financial vs. CTBC Financial Holding | Cathay Financial vs. Mercuries Life Insurance |
| Healthconn Corp vs. YuantaP shares Taiwan Electronics | Healthconn Corp vs. YuantaP shares Taiwan Mid Cap | Healthconn Corp vs. YuantaP shares Taiwan Top | Healthconn Corp vs. Fubon MSCI Taiwan |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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