Correlation Between Paradigm and Cathay Nasdaq

Can any of the company-specific risk be diversified away by investing in both Paradigm and Cathay Nasdaq 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 Paradigm and Cathay Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paradigm SP GSCI and Cathay Nasdaq AI, you can compare the effects of market volatilities on Paradigm and Cathay Nasdaq 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 Paradigm with a short position of Cathay Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paradigm and Cathay Nasdaq.

Diversification Opportunities for Paradigm and Cathay Nasdaq

-0.54

Correlation Coefficient

Paradigm  Cathay Nasdaq

Excellent diversification

The 3 months correlation between Paradigm and Cathay is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Paradigm SP GSCI and Cathay Nasdaq AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Nasdaq AI and Paradigm 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 Paradigm SP GSCI are associated (or correlated) with Cathay Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Nasdaq AI has no effect on the direction of Paradigm i.e., Paradigm and Cathay Nasdaq go up and down completely randomly.

Pair Corralation between Paradigm and Cathay Nasdaq

Assuming the 90 days trading horizon Paradigm SP GSCI is expected to under-perform the Cathay Nasdaq. But the etf apears to be less risky and, when comparing its historical volatility, Paradigm SP GSCI is 1.04 times less risky than Cathay Nasdaq. The etf trades about -0.03 of its potential returns per unit of risk. The Cathay Nasdaq AI is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,945  in Cathay Nasdaq AI on September 14, 2024 and sell it today you would earn a total of  448.00  from holding Cathay Nasdaq AI or generate 15.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Paradigm SP GSCI  vs.  Cathay Nasdaq AI

Paradigm SP GSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paradigm SP GSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Paradigm is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Cathay Nasdaq AI

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cathay Nasdaq AI are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Cathay Nasdaq unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paradigm and Cathay Nasdaq

The main advantage of trading using opposite Paradigm and Cathay Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradigm position performs unexpectedly, Cathay Nasdaq 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 Nasdaq will offset losses from the drop in Cathay Nasdaq's long position.

The idea behind Paradigm SP GSCI and Cathay Nasdaq AI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..