Correlation Between Max Zipper and Cathay Financial

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

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

Diversification Opportunities for Max Zipper and Cathay Financial

0.4

Correlation Coefficient

Max Zipper  Cathay Financial

Very weak diversification

The 3 months correlation between Max and Cathay is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Max Zipper 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 Max Zipper 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 Max Zipper 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 Max Zipper i.e., Max Zipper and Cathay Financial go up and down completely randomly.

Pair Corralation between Max Zipper and Cathay Financial

Assuming the 90 days trading horizon Max Zipper Co is expected to generate 11.58 times more return on investment than Cathay Financial. However, Max Zipper is 11.58 times more volatile than Cathay Financial Holding. It trades about 0.07 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.04 per unit of risk. If you would invest  4,125  in Max Zipper Co on October 4, 2024 and sell it today you would earn a total of  5,155  from holding Max Zipper Co or generate 124.97% return on investment over 90 days.

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

Max Zipper Co  vs.  Cathay Financial Holding

Max Zipper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Max Zipper may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cathay Financial Holding

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cathay Financial Holding are ranked lower than 21 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Max Zipper and Cathay Financial

The main advantage of trading using opposite Max Zipper and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Max Zipper 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.

The idea behind Max Zipper Co and Cathay Financial Holding 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.