Correlation Between C Media and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both C Media 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 C Media and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between C Media Electronics and Cathay Financial Holding, you can compare the effects of market volatilities on C Media 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 C Media with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of C Media and Cathay Financial.
Diversification Opportunities for C Media and Cathay Financial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 6237 and Cathay is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding C Media Electronics 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 C Media 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 C Media Electronics 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 C Media i.e., C Media and Cathay Financial go up and down completely randomly.
Pair Corralation between C Media and Cathay Financial
Assuming the 90 days trading horizon C Media Electronics is expected to under-perform the Cathay Financial. In addition to that, C Media is 10.28 times more volatile than Cathay Financial Holding. It trades about -0.02 of its total potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.21 per unit of volatility. If you would invest 6,060 in Cathay Financial Holding on September 14, 2024 and sell it today you would earn a total of 50.00 from holding Cathay Financial Holding or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
C Media Electronics vs. Cathay Financial Holding
Performance |
| Timeline |
| C Media Electronics |
| Cathay Financial Holding |
C Media and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with C Media and Cathay Financial
The main advantage of trading using opposite C Media and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C Media 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.| C Media vs. WIN Semiconductors | C Media vs. GlobalWafers Co | C Media vs. Novatek Microelectronics Corp | C Media vs. Ruentex Development Co |
| Cathay Financial vs. C Media Electronics | Cathay Financial vs. Holiday Entertainment Co | Cathay Financial vs. IBF Financial Holdings | Cathay Financial vs. Shinkong Insurance Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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