Correlation Between Wisher Industrial and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Wisher Industrial 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 Wisher Industrial and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wisher Industrial Co and Cathay Financial Holding, you can compare the effects of market volatilities on Wisher Industrial 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 Wisher Industrial with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisher Industrial and Cathay Financial.
Diversification Opportunities for Wisher Industrial and Cathay Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wisher and Cathay is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wisher Industrial Co 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 Wisher Industrial 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 Wisher Industrial Co 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 Wisher Industrial i.e., Wisher Industrial and Cathay Financial go up and down completely randomly.
Pair Corralation between Wisher Industrial and Cathay Financial
Assuming the 90 days trading horizon Wisher Industrial Co is expected to generate 5.23 times more return on investment than Cathay Financial. However, Wisher Industrial is 5.23 times more volatile than Cathay Financial Holding. It trades about 0.06 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.15 per unit of risk. If you would invest 1,420 in Wisher Industrial Co on December 30, 2024 and sell it today you would earn a total of 40.00 from holding Wisher Industrial Co or generate 2.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Wisher Industrial Co vs. Cathay Financial Holding
Performance |
Timeline |
Wisher Industrial |
Cathay Financial Holding |
Wisher Industrial and Cathay Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wisher Industrial and Cathay Financial
The main advantage of trading using opposite Wisher Industrial and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wisher Industrial 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.Wisher Industrial vs. De Licacy Industrial | Wisher Industrial vs. Nien Hsing Textile | Wisher Industrial vs. Tainan Enterprises Co | Wisher Industrial vs. Tex Ray Industrial Co |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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