Correlation Between Morgan Stanley and Sinopac TAIEX

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

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

Diversification Opportunities for Morgan Stanley and Sinopac TAIEX

-0.01

Correlation Coefficient

Morgan Stanley  Sinopac TAIEX

Good diversification

The 3 months correlation between Morgan and Sinopac is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct 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 Morgan Stanley 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 Morgan Stanley Direct 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 Morgan Stanley i.e., Morgan Stanley and Sinopac TAIEX go up and down completely randomly.

Pair Corralation between Morgan Stanley and Sinopac TAIEX

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.82 times less return on investment than Sinopac TAIEX. In addition to that, Morgan Stanley is 1.51 times more volatile than Sinopac TAIEX ETF. It trades about 0.04 of its total potential returns per unit of risk. Sinopac TAIEX ETF is currently generating about 0.1 per unit of volatility. If you would invest  7,200  in Sinopac TAIEX ETF on September 27, 2024 and sell it today you would earn a total of  4,425  from holding Sinopac TAIEX ETF or generate 61.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	48.86%
Values	Daily Returns

Morgan Stanley Direct  vs.  Sinopac TAIEX ETF

Morgan Stanley Direct

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Morgan Stanley and Sinopac TAIEX

The main advantage of trading using opposite Morgan Stanley and Sinopac TAIEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley 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 Morgan Stanley Direct 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.