Correlation Between Sinopac ICE and Sinopac TAIEX

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

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

Diversification Opportunities for Sinopac ICE and Sinopac TAIEX

-0.2

Correlation Coefficient

Sinopac ICE  Sinopac TAIEX

Good diversification

The 3 months correlation between Sinopac and Sinopac is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sinopac ICE 10 and Sinopac TAIEX ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopac TAIEX ETF and Sinopac ICE 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 Sinopac ICE 10 are associated (or correlated) with Sinopac TAIEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopac TAIEX ETF has no effect on the direction of Sinopac ICE i.e., Sinopac ICE and Sinopac TAIEX go up and down completely randomly.

Pair Corralation between Sinopac ICE and Sinopac TAIEX

Assuming the 90 days trading horizon Sinopac ICE 10 is expected to under-perform the Sinopac TAIEX. But the etf apears to be less risky and, when comparing its historical volatility, Sinopac ICE 10 is 1.18 times less risky than Sinopac TAIEX. The etf trades about -0.23 of its potential returns per unit of risk. The Sinopac TAIEX ETF is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  11,360  in Sinopac TAIEX ETF on September 27, 2024 and sell it today you would earn a total of  265.00  from holding Sinopac TAIEX ETF or generate 2.33% return on investment over 90 days.

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

Sinopac ICE 10  vs.  Sinopac TAIEX ETF

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.

Sinopac TAIEX ETF

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopac TAIEX ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sinopac TAIEX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sinopac ICE and Sinopac TAIEX

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

The idea behind Sinopac ICE 10 and Sinopac TAIEX ETF 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.