Correlation Between Gemtek Technology and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Gemtek Technology 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 Gemtek Technology and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gemtek Technology Co and Cathay Financial Holding, you can compare the effects of market volatilities on Gemtek Technology 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 Gemtek Technology with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemtek Technology and Cathay Financial.
Diversification Opportunities for Gemtek Technology and Cathay Financial
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gemtek and Cathay is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Gemtek Technology 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 Gemtek Technology 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 Gemtek Technology 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 Gemtek Technology i.e., Gemtek Technology and Cathay Financial go up and down completely randomly.
Pair Corralation between Gemtek Technology and Cathay Financial
Assuming the 90 days trading horizon Gemtek Technology Co is expected to under-perform the Cathay Financial. In addition to that, Gemtek Technology is 10.97 times more volatile than Cathay Financial Holding. It trades about -0.15 of its total potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.08 per unit of volatility. If you would invest 6,100 in Cathay Financial Holding on December 4, 2024 and sell it today you would earn a total of 40.00 from holding Cathay Financial Holding or generate 0.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gemtek Technology Co vs. Cathay Financial Holding
Performance |
Timeline |
Gemtek Technology |
Cathay Financial Holding |
Gemtek Technology and Cathay Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gemtek Technology and Cathay Financial
The main advantage of trading using opposite Gemtek Technology and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gemtek Technology 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.Gemtek Technology vs. D Link Corp | Gemtek Technology vs. Sunplus Technology Co | Gemtek Technology vs. Silitech Technology Corp | Gemtek Technology vs. Zinwell |
Cathay Financial vs. GeneReach Biotechnology | Cathay Financial vs. Ching Feng Home | Cathay Financial vs. China Airlines | Cathay Financial vs. Logah Technology Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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