Correlation Between LARGAN Precision and Cathay Real
Can any of the company-specific risk be diversified away by investing in both LARGAN Precision and Cathay Real 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 LARGAN Precision and Cathay Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LARGAN Precision Co and Cathay Real Estate, you can compare the effects of market volatilities on LARGAN Precision and Cathay Real 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 LARGAN Precision with a short position of Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of LARGAN Precision and Cathay Real.
Diversification Opportunities for LARGAN Precision and Cathay Real
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LARGAN and Cathay is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and Cathay Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Real Estate and LARGAN Precision 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 LARGAN Precision Co are associated (or correlated) with Cathay Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Real Estate has no effect on the direction of LARGAN Precision i.e., LARGAN Precision and Cathay Real go up and down completely randomly.
Pair Corralation between LARGAN Precision and Cathay Real
Assuming the 90 days trading horizon LARGAN Precision Co is expected to generate 0.95 times more return on investment than Cathay Real. However, LARGAN Precision Co is 1.06 times less risky than Cathay Real. It trades about 0.14 of its potential returns per unit of risk. Cathay Real Estate is currently generating about 0.11 per unit of risk. If you would invest 230,000 in LARGAN Precision Co on August 30, 2024 and sell it today you would earn a total of 14,500 from holding LARGAN Precision Co or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LARGAN Precision Co vs. Cathay Real Estate
Performance |
| Timeline |
| LARGAN Precision |
| Cathay Real Estate |
LARGAN Precision and Cathay Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LARGAN Precision and Cathay Real
The main advantage of trading using opposite LARGAN Precision and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LARGAN Precision position performs unexpectedly, Cathay Real 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 Real will offset losses from the drop in Cathay Real's long position.| LARGAN Precision vs. MediaTek | LARGAN Precision vs. Hon Hai Precision | LARGAN Precision vs. Delta Electronics | LARGAN Precision vs. Catcher Technology Co |
| Cathay Real vs. Tainan Spinning Co | Cathay Real vs. Carnival Industrial Corp | Cathay Real vs. Symtek Automation Asia | Cathay Real vs. CTCI Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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