Correlation Between Sinopac Financial and Taiwan Cooperative
Can any of the company-specific risk be diversified away by investing in both Sinopac Financial and Taiwan Cooperative 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 Taiwan Cooperative 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 Taiwan Cooperative Financial, you can compare the effects of market volatilities on Sinopac Financial and Taiwan Cooperative 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 Taiwan Cooperative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopac Financial and Taiwan Cooperative.
Diversification Opportunities for Sinopac Financial and Taiwan Cooperative
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sinopac and Taiwan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sinopac Financial Holdings and Taiwan Cooperative Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cooperative 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 Taiwan Cooperative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cooperative has no effect on the direction of Sinopac Financial i.e., Sinopac Financial and Taiwan Cooperative go up and down completely randomly.
Pair Corralation between Sinopac Financial and Taiwan Cooperative
Assuming the 90 days trading horizon Sinopac Financial Holdings is expected to generate 2.49 times more return on investment than Taiwan Cooperative. However, Sinopac Financial is 2.49 times more volatile than Taiwan Cooperative Financial. It trades about 0.06 of its potential returns per unit of risk. Taiwan Cooperative Financial is currently generating about -0.1 per unit of risk. If you would invest 2,315 in Sinopac Financial Holdings on August 28, 2024 and sell it today you would earn a total of 40.00 from holding Sinopac Financial Holdings or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopac Financial Holdings vs. Taiwan Cooperative Financial
Performance |
| Timeline |
| Sinopac Financial |
| Taiwan Cooperative |
Sinopac Financial and Taiwan Cooperative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopac Financial and Taiwan Cooperative
The main advantage of trading using opposite Sinopac Financial and Taiwan Cooperative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopac Financial position performs unexpectedly, Taiwan Cooperative 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 Taiwan Cooperative will offset losses from the drop in Taiwan Cooperative's long position.| Sinopac Financial vs. First Financial Holding | Sinopac Financial vs. Taishin Financial Holding | Sinopac Financial vs. CTBC Financial Holding | Sinopac Financial vs. Mega Financial Holding |
| Taiwan Cooperative vs. First Financial Holding | Taiwan Cooperative vs. Hua Nan Financial | Taiwan Cooperative vs. Mega Financial Holding | Taiwan Cooperative vs. ESUN 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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