Correlation Between Taiwan Speciality and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Taiwan Speciality 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 Taiwan Speciality and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Speciality Chemicals and Cathay Financial Holding, you can compare the effects of market volatilities on Taiwan Speciality 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 Taiwan Speciality with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Speciality and Cathay Financial.
Diversification Opportunities for Taiwan Speciality and Cathay Financial
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and Cathay is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Speciality Chemicals 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 Taiwan Speciality 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 Taiwan Speciality Chemicals 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 Taiwan Speciality i.e., Taiwan Speciality and Cathay Financial go up and down completely randomly.
Pair Corralation between Taiwan Speciality and Cathay Financial
Assuming the 90 days trading horizon Taiwan Speciality Chemicals is expected to generate 9.27 times more return on investment than Cathay Financial. However, Taiwan Speciality is 9.27 times more volatile than Cathay Financial Holding. It trades about 0.1 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.04 per unit of risk. If you would invest 8,964 in Taiwan Speciality Chemicals on October 30, 2024 and sell it today you would earn a total of 17,436 from holding Taiwan Speciality Chemicals or generate 194.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Speciality Chemicals vs. Cathay Financial Holding
Performance |
| Timeline |
| Taiwan Speciality |
| Cathay Financial Holding |
Taiwan Speciality and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Speciality and Cathay Financial
The main advantage of trading using opposite Taiwan Speciality and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Speciality 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.| Taiwan Speciality vs. Asia Electronic Material | Taiwan Speciality vs. DingZing Advanced Materials | Taiwan Speciality vs. Emerging Display Technologies | Taiwan Speciality vs. Formosan Rubber Group |
| Cathay Financial vs. Wha Yu Industrial | Cathay Financial vs. Aerospace Industrial Development | Cathay Financial vs. Chailease Holding Co | Cathay Financial vs. Song Ho Industrial |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |