Correlation Between Fubon MSCI and Sinopac Securities

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Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Sinopac Securities 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 MSCI and Sinopac Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon MSCI Taiwan and Sinopac Securities Corp, you can compare the effects of market volatilities on Fubon MSCI and Sinopac Securities 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 MSCI with a short position of Sinopac Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Sinopac Securities.

Diversification Opportunities for Fubon MSCI and Sinopac Securities

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Fubon and Sinopac is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Sinopac Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopac Securities Corp and Fubon MSCI 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 MSCI Taiwan are associated (or correlated) with Sinopac Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopac Securities Corp has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Sinopac Securities go up and down completely randomly.

Pair Corralation between Fubon MSCI and Sinopac Securities

Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.66 times more return on investment than Sinopac Securities. However, Fubon MSCI Taiwan is 1.52 times less risky than Sinopac Securities. It trades about 0.0 of its potential returns per unit of risk. Sinopac Securities Corp is currently generating about -0.03 per unit of risk. If you would invest  14,225  in Fubon MSCI Taiwan on October 16, 2024 and sell it today you would lose (15.00) from holding Fubon MSCI Taiwan or give up 0.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fubon MSCI Taiwan  vs.  Sinopac Securities Corp

 Performance 
       Timeline  
Fubon MSCI Taiwan 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Fubon MSCI Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fubon MSCI is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Sinopac Securities Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sinopac Securities Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sinopac Securities is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Fubon MSCI and Sinopac Securities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fubon MSCI and Sinopac Securities

The main advantage of trading using opposite Fubon MSCI and Sinopac Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Sinopac Securities 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 Securities will offset losses from the drop in Sinopac Securities' long position.
The idea behind Fubon MSCI Taiwan and Sinopac Securities Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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