Correlation Between Cathay Sustainability and Sinopac ICE

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

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

Diversification Opportunities for Cathay Sustainability and Sinopac ICE

-0.13

Correlation Coefficient

Cathay Sustainability  Sinopac ICE

Good diversification

The 3 months correlation between Cathay and Sinopac is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Sustainability High 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 Cathay Sustainability 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 Cathay Sustainability High 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 Cathay Sustainability i.e., Cathay Sustainability and Sinopac ICE go up and down completely randomly.

Pair Corralation between Cathay Sustainability and Sinopac ICE

Assuming the 90 days trading horizon Cathay Sustainability High is expected to generate 0.96 times more return on investment than Sinopac ICE. However, Cathay Sustainability High is 1.04 times less risky than Sinopac ICE. It trades about -0.03 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  2,245  in Cathay Sustainability High on October 15, 2024 and sell it today you would lose (39.00) from holding Cathay Sustainability High or give up 1.74% of portfolio value over 90 days.

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

Cathay Sustainability High  vs.  Sinopac ICE 10

Cathay Sustainability

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cathay Sustainability High has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cathay Sustainability is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Cathay Sustainability and Sinopac ICE

The main advantage of trading using opposite Cathay Sustainability and Sinopac ICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Sustainability 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 Cathay Sustainability High 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.