Correlation Between Chung Lien and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Chung Lien 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 Chung Lien and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Lien Transportation and Cathay Financial Holding, you can compare the effects of market volatilities on Chung Lien 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 Chung Lien with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and Cathay Financial.
Diversification Opportunities for Chung Lien and Cathay Financial
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chung and Cathay is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation 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 Chung Lien 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 Chung Lien Transportation 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 Chung Lien i.e., Chung Lien and Cathay Financial go up and down completely randomly.
Pair Corralation between Chung Lien and Cathay Financial
Assuming the 90 days trading horizon Chung Lien Transportation is expected to under-perform the Cathay Financial. In addition to that, Chung Lien is 2.08 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 0.04 per unit of volatility. If you would invest 5,690 in Cathay Financial Holding on September 3, 2024 and sell it today you would earn a total of 410.00 from holding Cathay Financial Holding or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Lien Transportation vs. Cathay Financial Holding
Performance |
| Timeline |
| Chung Lien Transportation |
| Cathay Financial Holding |
Chung Lien and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Lien and Cathay Financial
The main advantage of trading using opposite Chung Lien and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien 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.| Chung Lien vs. Kerry TJ Logistics | Chung Lien vs. Shan Loong Transportation Co | Chung Lien vs. YuantaP shares Taiwan Top | Chung Lien vs. YuantaP shares Taiwan Electronics |
| Cathay Financial vs. Cathay Financial Holding | Cathay Financial vs. Fubon Financial Holding | Cathay Financial vs. Mercuries Life Insurance | Cathay Financial vs. Mercuries Associates Holding |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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