Correlation Between Cathay Sustainability and Capital Nasdaq
Can any of the company-specific risk be diversified away by investing in both Cathay Sustainability and Capital 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 Cathay Sustainability and Capital Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathay Sustainability High and Capital Nasdaq Biotechnology, you can compare the effects of market volatilities on Cathay Sustainability and Capital 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 Cathay Sustainability with a short position of Capital Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Sustainability and Capital Nasdaq.
Diversification Opportunities for Cathay Sustainability and Capital Nasdaq
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cathay and Capital is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Sustainability High and Capital Nasdaq Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Nasdaq Biote and Cathay Sustainability 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 Cathay Sustainability High are associated (or correlated) with Capital Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Nasdaq Biote has no effect on the direction of Cathay Sustainability i.e., Cathay Sustainability and Capital Nasdaq go up and down completely randomly.
Pair Corralation between Cathay Sustainability and Capital Nasdaq
Assuming the 90 days trading horizon Cathay Sustainability is expected to generate 15.0 times less return on investment than Capital Nasdaq. But when comparing it to its historical volatility, Cathay Sustainability High is 1.93 times less risky than Capital Nasdaq. It trades about 0.01 of its potential returns per unit of risk. Capital Nasdaq Biotechnology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,823 in Capital Nasdaq Biotechnology on December 25, 2024 and sell it today you would earn a total of 68.00 from holding Capital Nasdaq Biotechnology or generate 2.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.21% |
Values | Daily Returns |
Cathay Sustainability High vs. Capital Nasdaq Biotechnology
Performance |
Timeline |
Cathay Sustainability |
Capital Nasdaq Biote |
Cathay Sustainability and Capital Nasdaq Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cathay Sustainability and Capital Nasdaq
The main advantage of trading using opposite Cathay Sustainability and Capital Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Sustainability position performs unexpectedly, Capital 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 Capital Nasdaq will offset losses from the drop in Capital Nasdaq's long position.Cathay Sustainability vs. Cathay TIP TAIEX | Cathay Sustainability vs. Cathay Nasdaq AI | Cathay Sustainability vs. Cathay Dow Jones | Cathay Sustainability vs. Cathay Bloomberg Barclays |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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