Correlation Between Newretail and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Newretail 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 Newretail and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Cathay Financial Holding, you can compare the effects of market volatilities on Newretail 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 Newretail with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Cathay Financial.
Diversification Opportunities for Newretail and Cathay Financial
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newretail and Cathay is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co 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 Newretail 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 Newretail Co 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 Newretail i.e., Newretail and Cathay Financial go up and down completely randomly.
Pair Corralation between Newretail and Cathay Financial
Assuming the 90 days trading horizon Newretail Co is expected to generate 16.5 times more return on investment than Cathay Financial. However, Newretail is 16.5 times more volatile than Cathay Financial Holding. It trades about 0.02 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.01 per unit of risk. If you would invest 2,140 in Newretail Co on November 28, 2024 and sell it today you would earn a total of 75.00 from holding Newretail Co or generate 3.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Newretail Co vs. Cathay Financial Holding
Performance |
Timeline |
Newretail |
Cathay Financial Holding |
Newretail and Cathay Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Newretail and Cathay Financial
The main advantage of trading using opposite Newretail and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail 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.Newretail vs. Est Global Apparel | Newretail vs. Cowealth Medical Holding | Newretail vs. PlayNitride | Newretail vs. Kinsus Interconnect Technology |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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