Correlation Between Shining Building and Cathay Real
Can any of the company-specific risk be diversified away by investing in both Shining Building and Cathay Real 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 Shining Building and Cathay Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shining Building Business and Cathay Real Estate, you can compare the effects of market volatilities on Shining Building and Cathay Real 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 Shining Building with a short position of Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shining Building and Cathay Real.
Diversification Opportunities for Shining Building and Cathay Real
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shining and Cathay is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shining Building Business and Cathay Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Real Estate and Shining Building 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 Shining Building Business are associated (or correlated) with Cathay Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Real Estate has no effect on the direction of Shining Building i.e., Shining Building and Cathay Real go up and down completely randomly.
Pair Corralation between Shining Building and Cathay Real
Assuming the 90 days trading horizon Shining Building Business is expected to generate 1.45 times more return on investment than Cathay Real. However, Shining Building is 1.45 times more volatile than Cathay Real Estate. It trades about 0.04 of its potential returns per unit of risk. Cathay Real Estate is currently generating about -0.16 per unit of risk. If you would invest 1,035 in Shining Building Business on October 25, 2024 and sell it today you would earn a total of 10.00 from holding Shining Building Business or generate 0.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Shining Building Business vs. Cathay Real Estate
Performance |
Timeline |
Shining Building Business |
Cathay Real Estate |
Shining Building and Cathay Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shining Building and Cathay Real
The main advantage of trading using opposite Shining Building and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shining Building position performs unexpectedly, Cathay Real 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 Real will offset losses from the drop in Cathay Real's long position.Shining Building vs. Farglory Land Development | Shining Building vs. Radium Life Tech | Shining Building vs. Huaku Development Co | Shining Building vs. Chong Hong Construction |
Cathay Real vs. Cathay Financial Holding | Cathay Real vs. Nan Ya Plastics | Cathay Real vs. Chang Hwa Commercial | Cathay Real vs. China Development Financial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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