Correlation Between Fubon TWSE and Sinopac Securities

Can any of the company-specific risk be diversified away by investing in both Fubon TWSE 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 TWSE 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 TWSE Corporate and Sinopac Securities Corp, you can compare the effects of market volatilities on Fubon TWSE 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 TWSE with a short position of Sinopac Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon TWSE and Sinopac Securities.

Diversification Opportunities for Fubon TWSE and Sinopac Securities

-0.11

Correlation Coefficient

Fubon TWSE  Sinopac Securities

Good diversification

The 3 months correlation between Fubon and Sinopac is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fubon TWSE Corporate 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 TWSE 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 TWSE Corporate 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 TWSE i.e., Fubon TWSE and Sinopac Securities go up and down completely randomly.

Pair Corralation between Fubon TWSE and Sinopac Securities

Assuming the 90 days trading horizon Fubon TWSE is expected to generate 1.38 times less return on investment than Sinopac Securities. In addition to that, Fubon TWSE is 1.04 times more volatile than Sinopac Securities Corp. It trades about 0.09 of its total potential returns per unit of risk. Sinopac Securities Corp is currently generating about 0.12 per unit of volatility. If you would invest  1,911  in Sinopac Securities Corp on October 11, 2024 and sell it today you would earn a total of  1,642  from holding Sinopac Securities Corp or generate 85.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fubon TWSE Corporate  vs.  Sinopac Securities Corp

Fubon TWSE Corporate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon TWSE Corporate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fubon TWSE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sinopac Securities Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopac Securities Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Fubon TWSE and Sinopac Securities

The main advantage of trading using opposite Fubon TWSE and Sinopac Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon TWSE 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 TWSE Corporate 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.