Correlation Between YuantaP Shares and Sinopac ICE

Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Sinopac ICE 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 YuantaP Shares and Sinopac ICE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YuantaP shares MSCI Taiwan and Sinopac ICE 10, you can compare the effects of market volatilities on YuantaP Shares and Sinopac ICE 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 YuantaP Shares with a short position of Sinopac ICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Sinopac ICE.

Diversification Opportunities for YuantaP Shares and Sinopac ICE

-0.42

Correlation Coefficient

YuantaP Shares  Sinopac ICE

Very good diversification

The 3 months correlation between YuantaP and Sinopac is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares MSCI Taiwan and Sinopac ICE 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopac ICE 10 and YuantaP Shares 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 YuantaP shares MSCI Taiwan are associated (or correlated) with Sinopac ICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopac ICE 10 has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Sinopac ICE go up and down completely randomly.

Pair Corralation between YuantaP Shares and Sinopac ICE

Assuming the 90 days trading horizon YuantaP shares MSCI Taiwan is expected to generate 1.46 times more return on investment than Sinopac ICE. However, YuantaP Shares is 1.46 times more volatile than Sinopac ICE 10. It trades about 0.11 of its potential returns per unit of risk. Sinopac ICE 10 is currently generating about -0.13 per unit of risk. If you would invest  8,635  in YuantaP shares MSCI Taiwan on September 28, 2024 and sell it today you would earn a total of  655.00  from holding YuantaP shares MSCI Taiwan or generate 7.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

YuantaP shares MSCI Taiwan  vs.  Sinopac ICE 10

YuantaP shares MSCI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares MSCI Taiwan are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, YuantaP Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sinopac ICE 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinopac ICE 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sinopac ICE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with YuantaP Shares and Sinopac ICE

The main advantage of trading using opposite YuantaP Shares and Sinopac ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Sinopac ICE 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 ICE will offset losses from the drop in Sinopac ICE's long position.

The idea behind YuantaP shares MSCI Taiwan and Sinopac ICE 10 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.