Correlation Between CTBC USD and Sinopac Securities

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

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

Diversification Opportunities for CTBC USD and Sinopac Securities

-0.2

Correlation Coefficient

CTBC USD  Sinopac Securities

Good diversification

The 3 months correlation between CTBC and Sinopac is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CTBC USD 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 CTBC USD 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 CTBC USD 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 CTBC USD i.e., CTBC USD and Sinopac Securities go up and down completely randomly.

Pair Corralation between CTBC USD and Sinopac Securities

Assuming the 90 days trading horizon CTBC USD is expected to generate 5.13 times less return on investment than Sinopac Securities. But when comparing it to its historical volatility, CTBC USD Corporate is 2.48 times less risky than Sinopac Securities. It trades about 0.02 of its potential returns per unit of risk. Sinopac Securities Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,362  in Sinopac Securities Corp on September 29, 2024 and sell it today you would earn a total of  260.00  from holding Sinopac Securities Corp or generate 7.73% return on investment over 90 days.

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

CTBC USD Corporate  vs.  Sinopac Securities Corp

CTBC USD Corporate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTBC USD Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CTBC USD 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

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopac Securities Corp are ranked lower than 11 (%) 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 CTBC USD and Sinopac Securities

The main advantage of trading using opposite CTBC USD and Sinopac Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTBC USD 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 CTBC USD 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.