Correlation Between Foxconn Technology and Cathay No2

Can any of the company-specific risk be diversified away by investing in both Foxconn Technology and Cathay No2 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 Foxconn Technology and Cathay No2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Foxconn Technology Co and Cathay No2 REIT, you can compare the effects of market volatilities on Foxconn Technology and Cathay No2 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 Foxconn Technology with a short position of Cathay No2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foxconn Technology and Cathay No2.

Diversification Opportunities for Foxconn Technology and Cathay No2

0.0

Correlation Coefficient

Foxconn Technology  Cathay No2

Pay attention - limited upside

The 3 months correlation between Foxconn and Cathay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Foxconn Technology Co and Cathay No2 REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay No2 REIT and Foxconn 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 Foxconn Technology Co are associated (or correlated) with Cathay No2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay No2 REIT has no effect on the direction of Foxconn Technology i.e., Foxconn Technology and Cathay No2 go up and down completely randomly.

Pair Corralation between Foxconn Technology and Cathay No2

If you would invest (100.00) in Cathay No2 REIT on September 14, 2024 and sell it today you would earn a total of  100.00  from holding Cathay No2 REIT 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

Foxconn Technology Co  vs.  Cathay No2 REIT

Foxconn Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Foxconn Technology Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Foxconn Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Cathay No2 REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cathay No2 REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cathay No2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Foxconn Technology and Cathay No2

The main advantage of trading using opposite Foxconn Technology and Cathay No2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foxconn Technology position performs unexpectedly, Cathay No2 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 No2 will offset losses from the drop in Cathay No2's long position.

The idea behind Foxconn Technology Co and Cathay No2 REIT 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.