Correlation Between Creative Sensor and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Creative Sensor 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 Creative Sensor and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Creative Sensor and Cathay Financial Holding, you can compare the effects of market volatilities on Creative Sensor 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 Creative Sensor with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creative Sensor and Cathay Financial.
Diversification Opportunities for Creative Sensor and Cathay Financial
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Creative and Cathay is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Creative Sensor 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 Creative Sensor 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 Creative Sensor 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 Creative Sensor i.e., Creative Sensor and Cathay Financial go up and down completely randomly.
Pair Corralation between Creative Sensor and Cathay Financial
Assuming the 90 days trading horizon Creative Sensor is expected to generate 7.78 times more return on investment than Cathay Financial. However, Creative Sensor is 7.78 times more volatile than Cathay Financial Holding. It trades about 0.09 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.02 per unit of risk. If you would invest 2,900 in Creative Sensor on September 15, 2024 and sell it today you would earn a total of 2,350 from holding Creative Sensor or generate 81.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Creative Sensor vs. Cathay Financial Holding
Performance |
| Timeline |
| Creative Sensor |
| Cathay Financial Holding |
Creative Sensor and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Creative Sensor and Cathay Financial
The main advantage of trading using opposite Creative Sensor and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creative Sensor 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.| Creative Sensor vs. AU Optronics | Creative Sensor vs. Innolux Corp | Creative Sensor vs. Ruentex Development Co | Creative Sensor vs. WiseChip Semiconductor |
| Cathay Financial vs. Cathay Financial Holding | Cathay Financial vs. CTBC 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 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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