Correlation Between Sinopac TAIEX and Cathay Koreataiwan
Can any of the company-specific risk be diversified away by investing in both Sinopac TAIEX 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 Sinopac TAIEX and Cathay Koreataiwan 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 Koreataiwan IT, you can compare the effects of market volatilities on Sinopac TAIEX 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 Sinopac TAIEX with a short position of Cathay Koreataiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopac TAIEX and Cathay Koreataiwan.
Diversification Opportunities for Sinopac TAIEX and Cathay Koreataiwan
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sinopac and Cathay is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sinopac TAIEX ETF and Cathay Koreataiwan IT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Koreataiwan 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 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 Sinopac TAIEX i.e., Sinopac TAIEX and Cathay Koreataiwan go up and down completely randomly.
Pair Corralation between Sinopac TAIEX and Cathay Koreataiwan
Assuming the 90 days trading horizon Sinopac TAIEX ETF is expected to generate 1.09 times more return on investment than Cathay Koreataiwan. However, Sinopac TAIEX is 1.09 times more volatile than Cathay Koreataiwan IT. It trades about -0.12 of its potential returns per unit of risk. Cathay Koreataiwan IT is currently generating about -0.15 per unit of risk. If you would invest 11,460 in Sinopac TAIEX ETF on September 1, 2024 and sell it today you would lose (295.00) from holding Sinopac TAIEX ETF or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sinopac TAIEX ETF vs. Cathay Koreataiwan IT
Performance |
| Timeline |
| Sinopac TAIEX ETF |
| Cathay Koreataiwan |
Sinopac TAIEX and Cathay Koreataiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopac TAIEX and Cathay Koreataiwan
The main advantage of trading using opposite Sinopac TAIEX and Cathay Koreataiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopac TAIEX 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.| 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 Koreataiwan vs. Yuanta Daily Taiwan | Cathay Koreataiwan vs. Yuanta Daily CSI | Cathay Koreataiwan vs. Fubon FTSE Vietnam | Cathay Koreataiwan vs. Fuh Hwa Emerging |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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