Correlation Between Cathay Financial and Century Iron
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Century Iron 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 Century Iron 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 Century Iron And, you can compare the effects of market volatilities on Cathay Financial and Century Iron 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 Century Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Century Iron.
Diversification Opportunities for Cathay Financial and Century Iron
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cathay and Century is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Century Iron And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Iron And 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 Century Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Iron And has no effect on the direction of Cathay Financial i.e., Cathay Financial and Century Iron go up and down completely randomly.
Pair Corralation between Cathay Financial and Century Iron
Assuming the 90 days trading horizon Cathay Financial Holding is expected to generate 0.39 times more return on investment than Century Iron. However, Cathay Financial Holding is 2.54 times less risky than Century Iron. It trades about 0.12 of its potential returns per unit of risk. Century Iron And is currently generating about -0.06 per unit of risk. If you would invest 6,320 in Cathay Financial Holding on September 13, 2024 and sell it today you would earn a total of 520.00 from holding Cathay Financial Holding or generate 8.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cathay Financial Holding vs. Century Iron And
Performance |
Timeline |
Cathay Financial Holding |
Century Iron And |
Cathay Financial and Century Iron Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cathay Financial and Century Iron
The main advantage of trading using opposite Cathay Financial and Century Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Century Iron 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 Century Iron will offset losses from the drop in Century Iron's long position.Cathay Financial vs. Fubon Financial Holding | Cathay Financial vs. CTBC Financial Holding | Cathay Financial vs. Mega Financial Holding | Cathay Financial vs. First Financial Holding |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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