Correlation Between Fuh Hwa and Sinopac Securities

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

By analyzing existing cross correlation between Fuh Hwa Emerging and Sinopac Securities Corp, you can compare the effects of market volatilities on Fuh Hwa 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 Fuh Hwa with a short position of Sinopac Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuh Hwa and Sinopac Securities.

Diversification Opportunities for Fuh Hwa and Sinopac Securities

-0.34

Correlation Coefficient

Fuh Hwa  Sinopac Securities

Very good diversification

The 3 months correlation between Fuh and Sinopac is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fuh Hwa Emerging 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 Fuh Hwa 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 Fuh Hwa Emerging 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 Fuh Hwa i.e., Fuh Hwa and Sinopac Securities go up and down completely randomly.

Pair Corralation between Fuh Hwa and Sinopac Securities

Assuming the 90 days trading horizon Fuh Hwa Emerging is expected to under-perform the Sinopac Securities. But the etf apears to be less risky and, when comparing its historical volatility, Fuh Hwa Emerging is 1.97 times less risky than Sinopac Securities. The etf trades about -0.15 of its potential returns per unit of risk. The Sinopac Securities Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,284  in Sinopac Securities Corp on September 28, 2024 and sell it today you would earn a total of  364.00  from holding Sinopac Securities Corp or generate 11.08% return on investment over 90 days.

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

Fuh Hwa Emerging  vs.  Sinopac Securities Corp

Fuh Hwa Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sinopac Securities Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopac Securities Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sinopac Securities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fuh Hwa and Sinopac Securities

The main advantage of trading using opposite Fuh Hwa and Sinopac Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuh Hwa 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 Fuh Hwa Emerging 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.