Correlation Between Sinopac TAIEX and Cathay TAIEX
Can any of the company-specific risk be diversified away by investing in both Sinopac TAIEX and Cathay TAIEX 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 Sinopac TAIEX and Cathay TAIEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinopac TAIEX ETF and Cathay TAIEX Daily, you can compare the effects of market volatilities on Sinopac TAIEX and Cathay TAIEX 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 Sinopac TAIEX with a short position of Cathay TAIEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopac TAIEX and Cathay TAIEX.
Diversification Opportunities for Sinopac TAIEX and Cathay TAIEX
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sinopac and Cathay is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sinopac TAIEX ETF and Cathay TAIEX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay TAIEX Daily and Sinopac TAIEX 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 Sinopac TAIEX ETF are associated (or correlated) with Cathay TAIEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay TAIEX Daily has no effect on the direction of Sinopac TAIEX i.e., Sinopac TAIEX and Cathay TAIEX go up and down completely randomly.
Pair Corralation between Sinopac TAIEX and Cathay TAIEX
Assuming the 90 days trading horizon Sinopac TAIEX ETF is expected to generate 0.93 times more return on investment than Cathay TAIEX. However, Sinopac TAIEX ETF is 1.08 times less risky than Cathay TAIEX. It trades about 0.1 of its potential returns per unit of risk. Cathay TAIEX Daily is currently generating about -0.09 per unit of risk. If you would invest 8,350 in Sinopac TAIEX ETF on September 1, 2024 and sell it today you would earn a total of 2,815 from holding Sinopac TAIEX ETF or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopac TAIEX ETF vs. Cathay TAIEX Daily
Performance |
| Timeline |
| Sinopac TAIEX ETF |
| Cathay TAIEX Daily |
Sinopac TAIEX and Cathay TAIEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopac TAIEX and Cathay TAIEX
The main advantage of trading using opposite Sinopac TAIEX and Cathay TAIEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopac TAIEX position performs unexpectedly, Cathay TAIEX 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 TAIEX will offset losses from the drop in Cathay TAIEX's long position.| Sinopac TAIEX vs. Yuanta Daily Taiwan | Sinopac TAIEX vs. Yuanta Daily CSI | Sinopac TAIEX vs. Fubon FTSE Vietnam | Sinopac TAIEX vs. Fuh Hwa Emerging |
| Cathay TAIEX vs. Cathay TIP TAIEX | Cathay TAIEX vs. Cathay Nasdaq AI | Cathay TAIEX vs. Cathay Dow Jones | Cathay TAIEX vs. Cathay Bloomberg Barclays |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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