Correlation Between Cathay Financial and Ligitek Electronics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Cathay Financial and Ligitek Electronics 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 Ligitek Electronics 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 Ligitek Electronics Co, you can compare the effects of market volatilities on Cathay Financial and Ligitek Electronics 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 Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Financial and Ligitek Electronics.

Diversification Opportunities for Cathay Financial and Ligitek Electronics

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cathay and Ligitek is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Financial Holding and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics 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 Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Cathay Financial i.e., Cathay Financial and Ligitek Electronics go up and down completely randomly.

Pair Corralation between Cathay Financial and Ligitek Electronics

Assuming the 90 days trading horizon Cathay Financial Holding is expected to under-perform the Ligitek Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Cathay Financial Holding is 26.27 times less risky than Ligitek Electronics. The stock trades about -0.35 of its potential returns per unit of risk. The Ligitek Electronics Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,350  in Ligitek Electronics Co on February 1, 2024 and sell it today you would earn a total of  45.00  from holding Ligitek Electronics Co or generate 1.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cathay Financial Holding  vs.  Ligitek Electronics Co

 Performance 
       Timeline  
Cathay Financial Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest stock price uproar, may contribute to short-horizon losses for the private investors.
Ligitek Electronics 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ligitek Electronics Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ligitek Electronics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Cathay Financial and Ligitek Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cathay Financial and Ligitek Electronics

The main advantage of trading using opposite Cathay Financial and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Financial position performs unexpectedly, Ligitek Electronics 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' long position.
The idea behind Cathay Financial Holding and Ligitek Electronics Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

Other Complementary Tools

Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Fundamental Analysis
View fundamental data based on most recent published financial statements
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine