Correlation Between Giant Manufacturing and Cathay Taiwan
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Cathay Taiwan 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 Giant Manufacturing and Cathay Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and Cathay Taiwan 5G, you can compare the effects of market volatilities on Giant Manufacturing and Cathay Taiwan 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 Giant Manufacturing with a short position of Cathay Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Cathay Taiwan.
Diversification Opportunities for Giant Manufacturing and Cathay Taiwan
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Giant and Cathay is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Cathay Taiwan 5G in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Taiwan 5G and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Cathay Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Taiwan 5G has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Cathay Taiwan go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Cathay Taiwan
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Cathay Taiwan. In addition to that, Giant Manufacturing is 1.74 times more volatile than Cathay Taiwan 5G. It trades about -0.33 of its total potential returns per unit of risk. Cathay Taiwan 5G is currently generating about 0.04 per unit of volatility. If you would invest 2,420 in Cathay Taiwan 5G on September 13, 2024 and sell it today you would earn a total of 35.00 from holding Cathay Taiwan 5G or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Cathay Taiwan 5G
Performance |
| Timeline |
| Giant Manufacturing |
| Cathay Taiwan 5G |
Giant Manufacturing and Cathay Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Cathay Taiwan
The main advantage of trading using opposite Giant Manufacturing and Cathay Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Cathay Taiwan 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 Taiwan will offset losses from the drop in Cathay Taiwan's long position.| Giant Manufacturing vs. Feng Tay Enterprises | Giant Manufacturing vs. Ruentex Development Co | Giant Manufacturing vs. WiseChip Semiconductor | Giant Manufacturing vs. Novatek Microelectronics Corp |
| Cathay Taiwan vs. YuantaP shares Taiwan Top | Cathay Taiwan vs. Yuanta Daily Taiwan | Cathay Taiwan vs. Yuanta Daily CSI | Cathay Taiwan vs. Cathay Sustainability High |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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