Correlation Between Sinopac TAIEX and Cathay SP
Can any of the company-specific risk be diversified away by investing in both Sinopac TAIEX and Cathay SP 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 SP 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 SP North, you can compare the effects of market volatilities on Sinopac TAIEX and Cathay SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopac TAIEX and Cathay SP.
Diversification Opportunities for Sinopac TAIEX and Cathay SP
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sinopac and Cathay is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sinopac TAIEX ETF and Cathay SP North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay SP North 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay SP North has no effect on the direction of Sinopac TAIEX i.e., Sinopac TAIEX and Cathay SP go up and down completely randomly.
Pair Corralation between Sinopac TAIEX and Cathay SP
Assuming the 90 days trading horizon Sinopac TAIEX ETF is expected to generate 0.71 times more return on investment than Cathay SP. However, Sinopac TAIEX ETF is 1.41 times less risky than Cathay SP. It trades about 0.19 of its potential returns per unit of risk. Cathay SP North is currently generating about -0.13 per unit of risk. If you would invest 11,380 in Sinopac TAIEX ETF on November 29, 2024 and sell it today you would earn a total of 280.00 from holding Sinopac TAIEX ETF or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Sinopac TAIEX ETF vs. Cathay SP North
Performance |
| Timeline |
| Sinopac TAIEX ETF |
| Cathay SP North |
Sinopac TAIEX and Cathay SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopac TAIEX and Cathay SP
The main advantage of trading using opposite Sinopac TAIEX and Cathay SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopac TAIEX position performs unexpectedly, Cathay SP 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 SP will offset losses from the drop in Cathay SP's long position.| Sinopac TAIEX vs. Sinopac Securities Corp | Sinopac TAIEX vs. Sinopac ICE 10 | Sinopac TAIEX vs. Sinopac Securities Corp | Sinopac TAIEX vs. CTBC USD Corporate |
| Cathay SP vs. Cathay TIP TAIEX | Cathay SP vs. Cathay Nasdaq AI | Cathay SP vs. Cathay Dow Jones | Cathay SP 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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