Correlation Between Sinopac Financial and Cheng Mei
Can any of the company-specific risk be diversified away by investing in both Sinopac Financial and Cheng Mei 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 Financial and Cheng Mei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinopac Financial Holdings and Cheng Mei Materials, you can compare the effects of market volatilities on Sinopac Financial and Cheng Mei 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 Financial with a short position of Cheng Mei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopac Financial and Cheng Mei.
Diversification Opportunities for Sinopac Financial and Cheng Mei
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sinopac and Cheng is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sinopac Financial Holdings and Cheng Mei Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Mei Materials and Sinopac Financial 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 Financial Holdings are associated (or correlated) with Cheng Mei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Mei Materials has no effect on the direction of Sinopac Financial i.e., Sinopac Financial and Cheng Mei go up and down completely randomly.
Pair Corralation between Sinopac Financial and Cheng Mei
Assuming the 90 days trading horizon Sinopac Financial Holdings is expected to generate 0.64 times more return on investment than Cheng Mei. However, Sinopac Financial Holdings is 1.56 times less risky than Cheng Mei. It trades about 0.03 of its potential returns per unit of risk. Cheng Mei Materials is currently generating about -0.04 per unit of risk. If you would invest 2,305 in Sinopac Financial Holdings on September 3, 2024 and sell it today you would earn a total of 95.00 from holding Sinopac Financial Holdings or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopac Financial Holdings vs. Cheng Mei Materials
Performance |
| Timeline |
| Sinopac Financial |
| Cheng Mei Materials |
Sinopac Financial and Cheng Mei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopac Financial and Cheng Mei
The main advantage of trading using opposite Sinopac Financial and Cheng Mei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopac Financial position performs unexpectedly, Cheng Mei 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 Cheng Mei will offset losses from the drop in Cheng Mei's long position.| Sinopac Financial vs. Central Reinsurance Corp | Sinopac Financial vs. Huaku Development Co | Sinopac Financial vs. Chailease Holding Co | Sinopac Financial vs. CTBC Financial Holding |
| Cheng Mei vs. Taiwan Semiconductor Manufacturing | Cheng Mei vs. Yang Ming Marine | Cheng Mei vs. ASE Industrial Holding | Cheng Mei vs. AU Optronics |
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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