Correlation Between Cathay Consolidated and Singtex Industrial

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

By analyzing existing cross correlation between Cathay Consolidated and Singtex Industrial Co, you can compare the effects of market volatilities on Cathay Consolidated and Singtex Industrial 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 Consolidated with a short position of Singtex Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Consolidated and Singtex Industrial.

Diversification Opportunities for Cathay Consolidated and Singtex Industrial

0.14

Correlation Coefficient

Cathay Consolidated  Singtex Industrial

Average diversification

The 3 months correlation between Cathay and Singtex is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Consolidated and Singtex Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singtex Industrial and Cathay Consolidated 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 Consolidated are associated (or correlated) with Singtex Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singtex Industrial has no effect on the direction of Cathay Consolidated i.e., Cathay Consolidated and Singtex Industrial go up and down completely randomly.

Pair Corralation between Cathay Consolidated and Singtex Industrial

Assuming the 90 days trading horizon Cathay Consolidated is expected to generate 1.04 times more return on investment than Singtex Industrial. However, Cathay Consolidated is 1.04 times more volatile than Singtex Industrial Co. It trades about 0.09 of its potential returns per unit of risk. Singtex Industrial Co is currently generating about 0.08 per unit of risk. If you would invest  10,750  in Cathay Consolidated on December 4, 2024 and sell it today you would earn a total of  250.00  from holding Cathay Consolidated or generate 2.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cathay Consolidated  vs.  Singtex Industrial Co

Cathay Consolidated

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cathay Consolidated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cathay Consolidated may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Singtex Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Singtex Industrial Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Singtex Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cathay Consolidated and Singtex Industrial

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

The idea behind Cathay Consolidated and Singtex Industrial Co 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.