Correlation Between Yuanta Financial and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Yuanta Financial and Cathay Financial 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 Yuanta Financial and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yuanta Financial Holdings and Cathay Financial Holding, you can compare the effects of market volatilities on Yuanta Financial and Cathay Financial 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 Yuanta Financial with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yuanta Financial and Cathay Financial.
Diversification Opportunities for Yuanta Financial and Cathay Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yuanta and Cathay is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Yuanta Financial Holdings and Cathay Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Financial Holding and Yuanta 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 Yuanta Financial Holdings are associated (or correlated) with Cathay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Financial Holding has no effect on the direction of Yuanta Financial i.e., Yuanta Financial and Cathay Financial go up and down completely randomly.
Pair Corralation between Yuanta Financial and Cathay Financial
Assuming the 90 days trading horizon Yuanta Financial Holdings is expected to generate 5.05 times more return on investment than Cathay Financial. However, Yuanta Financial is 5.05 times more volatile than Cathay Financial Holding. It trades about 0.15 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.27 per unit of risk. If you would invest 3,210 in Yuanta Financial Holdings on September 2, 2024 and sell it today you would earn a total of 115.00 from holding Yuanta Financial Holdings or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yuanta Financial Holdings vs. Cathay Financial Holding
Performance |
| Timeline |
| Yuanta Financial Holdings |
| Cathay Financial Holding |
Yuanta Financial and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yuanta Financial and Cathay Financial
The main advantage of trading using opposite Yuanta Financial and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanta Financial position performs unexpectedly, Cathay Financial 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 Cathay Financial will offset losses from the drop in Cathay Financial's long position.| Yuanta Financial vs. Central Reinsurance Corp | Yuanta Financial vs. Huaku Development Co | Yuanta Financial vs. Fubon Financial Holding |
| Cathay Financial vs. Cathay Financial Holding | Cathay Financial vs. Fubon Financial Holding | Cathay Financial vs. Mercuries Life Insurance |
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 CEOs Directory module to screen CEOs from public companies around the world.
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