Correlation Between Cathay Financial and Taiming Assurance

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

Diversification Opportunities for Cathay Financial and Taiming Assurance

0.0

Correlation Coefficient

Cathay Financial  Taiming Assurance

Pay attention - limited upside

The 3 months correlation between Cathay and Taiming is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Taiming Assurance Broker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiming Assurance Broker 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 Taiming Assurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiming Assurance Broker has no effect on the direction of Cathay Financial i.e., Cathay Financial and Taiming Assurance go up and down completely randomly.

Pair Corralation between Cathay Financial and Taiming Assurance

If you would invest (100.00) in Taiming Assurance Broker on February 17, 2024 and sell it today you would earn a total of  100.00  from holding Taiming Assurance Broker or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cathay Financial Holding  vs.  Taiming Assurance Broker

Cathay Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Taiming Assurance Broker

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Taiming Assurance Broker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiming Assurance is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cathay Financial and Taiming Assurance

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

The idea behind Cathay Financial Holding and Taiming Assurance Broker 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.