Correlation Between Integrated Service and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Integrated Service 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 Integrated Service and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Integrated Service Technology and Cathay Financial Holding, you can compare the effects of market volatilities on Integrated Service 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 Integrated Service with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Service and Cathay Financial.
Diversification Opportunities for Integrated Service and Cathay Financial
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Integrated and Cathay is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Service 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 Integrated Service 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 Integrated Service 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 Integrated Service i.e., Integrated Service and Cathay Financial go up and down completely randomly.
Pair Corralation between Integrated Service and Cathay Financial
Assuming the 90 days trading horizon Integrated Service Technology is expected to under-perform the Cathay Financial. In addition to that, Integrated Service is 18.67 times more volatile than Cathay Financial Holding. It trades about -0.04 of its total potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.14 per unit of volatility. If you would invest 6,030 in Cathay Financial Holding on September 3, 2024 and sell it today you would earn a total of 80.00 from holding Cathay Financial Holding or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Integrated Service Technology vs. Cathay Financial Holding
Performance |
| Timeline |
| Integrated Service |
| Cathay Financial Holding |
Integrated Service and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Integrated Service and Cathay Financial
The main advantage of trading using opposite Integrated Service and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Service 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.| Integrated Service vs. Sitronix Technology Corp | Integrated Service vs. Kinsus Interconnect Technology | Integrated Service vs. WiseChip Semiconductor | Integrated Service vs. Novatek Microelectronics Corp |
| Cathay Financial vs. Cathay Financial Holding | Cathay Financial vs. Fubon Financial Holding | Cathay Financial vs. CTBC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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