Correlation Between Microtips Technology and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Microtips Technology 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 Microtips Technology and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microtips Technology and Cathay Financial Holding, you can compare the effects of market volatilities on Microtips Technology 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 Microtips Technology with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microtips Technology and Cathay Financial.
Diversification Opportunities for Microtips Technology and Cathay Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microtips and Cathay is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microtips Technology 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 Microtips Technology 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 Microtips Technology 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 Microtips Technology i.e., Microtips Technology and Cathay Financial go up and down completely randomly.
Pair Corralation between Microtips Technology and Cathay Financial
Assuming the 90 days trading horizon Microtips Technology is expected to under-perform the Cathay Financial. In addition to that, Microtips Technology is 8.01 times more volatile than Cathay Financial Holding. It trades about -0.23 of its total potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.5 per unit of volatility. If you would invest 5,890 in Cathay Financial Holding on September 15, 2024 and sell it today you would earn a total of 120.00 from holding Cathay Financial Holding or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microtips Technology vs. Cathay Financial Holding
Performance |
| Timeline |
| Microtips Technology |
| Cathay Financial Holding |
Microtips Technology and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microtips Technology and Cathay Financial
The main advantage of trading using opposite Microtips Technology and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microtips Technology 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.| Microtips Technology vs. WIN Semiconductors | Microtips Technology vs. GlobalWafers Co | Microtips Technology vs. Novatek Microelectronics Corp | Microtips Technology vs. Ruentex Development Co |
| Cathay Financial vs. Apex Biotechnology Corp | Cathay Financial vs. Acelon Chemicals Fiber | Cathay Financial vs. Level Biotechnology | Cathay Financial vs. Golden Biotechnology |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |