Correlation Between Cathay Financial and BIN Live

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

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

Diversification Opportunities for Cathay Financial and BIN Live

0.54

Correlation Coefficient

Cathay Financial  BIN Live

Very weak diversification

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

Pair Corralation between Cathay Financial and BIN Live

Assuming the 90 days trading horizon Cathay Financial is expected to generate 59.17 times less return on investment than BIN Live. But when comparing it to its historical volatility, Cathay Financial Holding is 1.4 times less risky than BIN Live. It trades about 0.0 of its potential returns per unit of risk. BIN Live Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,490  in BIN Live Co on October 7, 2024 and sell it today you would earn a total of  330.00  from holding BIN Live Co or generate 3.89% return on investment over 90 days.

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

Cathay Financial Holding  vs.  BIN Live Co

Cathay Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cathay Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Cathay Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BIN Live

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIN Live Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BIN Live 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 Financial and BIN Live

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

The idea behind Cathay Financial Holding and BIN Live 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.