Correlation Between Cathay Financial and Kinsus Interconnect

Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Kinsus Interconnect 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 Kinsus Interconnect 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 Kinsus Interconnect Technology, you can compare the effects of market volatilities on Cathay Financial and Kinsus Interconnect 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 Kinsus Interconnect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Kinsus Interconnect.

Diversification Opportunities for Cathay Financial and Kinsus Interconnect

0.14

Correlation Coefficient

Cathay Financial  Kinsus Interconnect

Average diversification

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

Pair Corralation between Cathay Financial and Kinsus Interconnect

Assuming the 90 days trading horizon Cathay Financial is expected to generate 19.2 times less return on investment than Kinsus Interconnect. But when comparing it to its historical volatility, Cathay Financial Holding is 18.85 times less risky than Kinsus Interconnect. It trades about 0.06 of its potential returns per unit of risk. Kinsus Interconnect Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,370  in Kinsus Interconnect Technology on December 2, 2024 and sell it today you would earn a total of  730.00  from holding Kinsus Interconnect Technology or generate 7.79% return on investment over 90 days.

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

Cathay Financial Holding  vs.  Kinsus Interconnect Technology

Cathay Financial Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cathay Financial Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cathay Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Kinsus Interconnect

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsus Interconnect Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kinsus Interconnect may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cathay Financial and Kinsus Interconnect

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

The idea behind Cathay Financial Holding and Kinsus Interconnect Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.