Correlation Between Fubon FTSE and Sinopac TAIEX
Can any of the company-specific risk be diversified away by investing in both Fubon FTSE and Sinopac 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 Fubon FTSE and Sinopac TAIEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon FTSE Vietnam and Sinopac TAIEX ETF, you can compare the effects of market volatilities on Fubon FTSE and Sinopac 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 Fubon FTSE with a short position of Sinopac TAIEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon FTSE and Sinopac TAIEX.
Diversification Opportunities for Fubon FTSE and Sinopac TAIEX
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Sinopac is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fubon FTSE Vietnam and Sinopac TAIEX ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopac TAIEX ETF and Fubon FTSE 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 Fubon FTSE Vietnam are associated (or correlated) with Sinopac TAIEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopac TAIEX ETF has no effect on the direction of Fubon FTSE i.e., Fubon FTSE and Sinopac TAIEX go up and down completely randomly.
Pair Corralation between Fubon FTSE and Sinopac TAIEX
Assuming the 90 days trading horizon Fubon FTSE Vietnam is expected to under-perform the Sinopac TAIEX. But the etf apears to be less risky and, when comparing its historical volatility, Fubon FTSE Vietnam is 1.88 times less risky than Sinopac TAIEX. The etf trades about -0.05 of its potential returns per unit of risk. The Sinopac TAIEX ETF is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 10,650 in Sinopac TAIEX ETF on September 3, 2024 and sell it today you would earn a total of 515.00 from holding Sinopac TAIEX ETF or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon FTSE Vietnam vs. Sinopac TAIEX ETF
Performance |
| Timeline |
| Fubon FTSE Vietnam |
| Sinopac TAIEX ETF |
Fubon FTSE and Sinopac TAIEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon FTSE and Sinopac TAIEX
The main advantage of trading using opposite Fubon FTSE and Sinopac TAIEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon FTSE position performs unexpectedly, Sinopac 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 Sinopac TAIEX will offset losses from the drop in Sinopac TAIEX's long position.| Fubon FTSE vs. Cathay Taiwan 5G | Fubon FTSE vs. Ruentex Development Co | Fubon FTSE vs. Symtek Automation Asia | Fubon FTSE vs. CTCI Corp |
| Sinopac TAIEX vs. Cathay Taiwan 5G | Sinopac TAIEX vs. Ruentex Development Co | Sinopac TAIEX vs. Symtek Automation Asia | Sinopac TAIEX vs. CTCI Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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