Correlation Between Sports Gear and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Sports Gear 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 Sports Gear and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sports Gear Co and Cathay Financial Holding, you can compare the effects of market volatilities on Sports Gear 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 Sports Gear with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sports Gear and Cathay Financial.
Diversification Opportunities for Sports Gear and Cathay Financial
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sports and Cathay is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sports Gear Co 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 Sports Gear 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 Sports Gear Co 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 Sports Gear i.e., Sports Gear and Cathay Financial go up and down completely randomly.
Pair Corralation between Sports Gear and Cathay Financial
Assuming the 90 days trading horizon Sports Gear Co is expected to generate 20.01 times more return on investment than Cathay Financial. However, Sports Gear is 20.01 times more volatile than Cathay Financial Holding. It trades about 0.24 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about -0.06 per unit of risk. If you would invest 12,000 in Sports Gear Co on October 31, 2024 and sell it today you would earn a total of 1,600 from holding Sports Gear Co or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sports Gear Co vs. Cathay Financial Holding
Performance |
| Timeline |
| Sports Gear |
| Cathay Financial Holding |
Sports Gear and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sports Gear and Cathay Financial
The main advantage of trading using opposite Sports Gear and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sports Gear 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.| Sports Gear vs. Feng Tay Enterprises | Sports Gear vs. Pou Chen Corp | Sports Gear vs. Fulgent Sun International | Sports Gear vs. Taiwan Paiho |
| Cathay Financial vs. Level Biotechnology | Cathay Financial vs. Chinese Maritime Transport | Cathay Financial vs. Chung Lien Transportation | Cathay Financial vs. Asmedia Technology |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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