Correlation Between Cathay Sustainability and Sinopac Securities

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

Diversification Opportunities for Cathay Sustainability and Sinopac Securities

-0.22

Correlation Coefficient

Cathay Sustainability  Sinopac Securities

Very good diversification

The 3 months correlation between Cathay and Sinopac is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Sustainability High 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 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 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 Cathay Sustainability i.e., Cathay Sustainability and Sinopac Securities go up and down completely randomly.

Pair Corralation between Cathay Sustainability and Sinopac Securities

Assuming the 90 days trading horizon Cathay Sustainability High is expected to under-perform the Sinopac Securities. But the etf apears to be less risky and, when comparing its historical volatility, Cathay Sustainability High is 10.05 times less risky than Sinopac Securities. The etf trades about 0.0 of its potential returns per unit of risk. The Sinopac Securities Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Sinopac Securities Corp on September 29, 2024 and sell it today you would lose (107.00) from holding Sinopac Securities Corp or give up 10.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Cathay Sustainability High  vs.  Sinopac Securities Corp

Cathay Sustainability

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cathay Sustainability High are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cathay Sustainability is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sinopac Securities Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopac Securities Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Sinopac Securities unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cathay Sustainability and Sinopac Securities

The main advantage of trading using opposite Cathay Sustainability and Sinopac Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathay Sustainability 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 Cathay Sustainability High 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.