Correlation Between Armada Hflr and Cathay Koreataiwan

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

By analyzing existing cross correlation between Armada Hflr Pr and Cathay Koreataiwan IT, you can compare the effects of market volatilities on Armada Hflr and Cathay Koreataiwan 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 Armada Hflr with a short position of Cathay Koreataiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Cathay Koreataiwan.

Diversification Opportunities for Armada Hflr and Cathay Koreataiwan

0.23

Correlation Coefficient

Armada Hflr  Cathay Koreataiwan

Modest diversification

The 3 months correlation between Armada and Cathay is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Cathay Koreataiwan IT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Koreataiwan and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Cathay Koreataiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Koreataiwan has no effect on the direction of Armada Hflr i.e., Armada Hflr and Cathay Koreataiwan go up and down completely randomly.

Pair Corralation between Armada Hflr and Cathay Koreataiwan

Considering the 90-day investment horizon Armada Hflr is expected to generate 4.82 times less return on investment than Cathay Koreataiwan. In addition to that, Armada Hflr is 1.17 times more volatile than Cathay Koreataiwan IT. It trades about 0.01 of its total potential returns per unit of risk. Cathay Koreataiwan IT is currently generating about 0.05 per unit of volatility. If you would invest  2,441  in Cathay Koreataiwan IT on September 27, 2024 and sell it today you would earn a total of  849.00  from holding Cathay Koreataiwan IT or generate 34.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.58%
Values	Daily Returns

Armada Hflr Pr  vs.  Cathay Koreataiwan IT

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Cathay Koreataiwan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cathay Koreataiwan IT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cathay Koreataiwan is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Armada Hflr and Cathay Koreataiwan

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

The idea behind Armada Hflr Pr and Cathay Koreataiwan IT 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.