Correlation Between Wei Chuan and Sinopac Financial
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Sinopac Financial 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 Wei Chuan and Sinopac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wei Chuan Foods and Sinopac Financial Holdings, you can compare the effects of market volatilities on Wei Chuan and Sinopac Financial 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 Wei Chuan with a short position of Sinopac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Sinopac Financial.
Diversification Opportunities for Wei Chuan and Sinopac Financial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wei and Sinopac is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Sinopac Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopac Financial and Wei Chuan 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 Wei Chuan Foods are associated (or correlated) with Sinopac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopac Financial has no effect on the direction of Wei Chuan i.e., Wei Chuan and Sinopac Financial go up and down completely randomly.
Pair Corralation between Wei Chuan and Sinopac Financial
Assuming the 90 days trading horizon Wei Chuan Foods is expected to under-perform the Sinopac Financial. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chuan Foods is 2.27 times less risky than Sinopac Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Sinopac Financial Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,325 in Sinopac Financial Holdings on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Sinopac Financial Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. Sinopac Financial Holdings
Performance |
| Timeline |
| Wei Chuan Foods |
| Sinopac Financial |
Wei Chuan and Sinopac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Sinopac Financial
The main advantage of trading using opposite Wei Chuan and Sinopac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Sinopac Financial 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 Financial will offset losses from the drop in Sinopac Financial's long position.| Wei Chuan vs. De Licacy Industrial | Wei Chuan vs. Wisher Industrial Co | Wei Chuan vs. Tainan Enterprises Co |
| Sinopac Financial vs. First Financial Holding | Sinopac Financial vs. Taishin Financial Holding | Sinopac Financial vs. CTBC Financial Holding | Sinopac Financial vs. Mega Financial Holding |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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