Correlation Between Ford and Sinopac TAIEX

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

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

Diversification Opportunities for Ford and Sinopac TAIEX

-0.34

Correlation Coefficient

Ford  Sinopac TAIEX

Very good diversification

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

Pair Corralation between Ford and Sinopac TAIEX

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Sinopac TAIEX. In addition to that, Ford is 1.28 times more volatile than Sinopac TAIEX ETF. It trades about -0.11 of its total potential returns per unit of risk. Sinopac TAIEX ETF is currently generating about -0.08 per unit of volatility. If you would invest  11,540  in Sinopac TAIEX ETF on October 15, 2024 and sell it today you would lose (210.00) from holding Sinopac TAIEX ETF or give up 1.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Ford Motor  vs.  Sinopac TAIEX ETF

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sinopac TAIEX ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinopac TAIEX ETF has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Ford and Sinopac TAIEX

The main advantage of trading using opposite Ford and Sinopac TAIEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..