Correlation Between Level Biotechnology and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Level Biotechnology 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 Level Biotechnology and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Level Biotechnology and Cathay Financial Holding, you can compare the effects of market volatilities on Level Biotechnology 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 Level Biotechnology with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Level Biotechnology and Cathay Financial.
Diversification Opportunities for Level Biotechnology and Cathay Financial
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Level and Cathay is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Level Biotechnology 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 Level Biotechnology 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 Level Biotechnology 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 Level Biotechnology i.e., Level Biotechnology and Cathay Financial go up and down completely randomly.
Pair Corralation between Level Biotechnology and Cathay Financial
Assuming the 90 days trading horizon Level Biotechnology is expected to generate 3.91 times more return on investment than Cathay Financial. However, Level Biotechnology is 3.91 times more volatile than Cathay Financial Holding. It trades about 0.12 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.0 per unit of risk. If you would invest 3,200 in Level Biotechnology on November 1, 2024 and sell it today you would earn a total of 40.00 from holding Level Biotechnology or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Level Biotechnology vs. Cathay Financial Holding
Performance |
| Timeline |
| Level Biotechnology |
| Cathay Financial Holding |
Level Biotechnology and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Level Biotechnology and Cathay Financial
The main advantage of trading using opposite Level Biotechnology and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Level Biotechnology 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.| Level Biotechnology vs. United Radiant Technology | Level Biotechnology vs. Arbor Technology | Level Biotechnology vs. Fubon Taiwan Technology | Level Biotechnology vs. Holiday Entertainment Co |
| Cathay Financial vs. Asmedia Technology | Cathay Financial vs. U Tech Media Corp | Cathay Financial vs. Sports Gear Co | Cathay Financial vs. Genovate Biotechnology Co |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |