Correlation Between Fubon MSCI and New Advanced

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

By analyzing existing cross correlation between Fubon MSCI Taiwan and New Advanced Electronics, you can compare the effects of market volatilities on Fubon MSCI and New Advanced 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 Fubon MSCI with a short position of New Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and New Advanced.

Diversification Opportunities for Fubon MSCI and New Advanced

0.01

Correlation Coefficient

Fubon MSCI  New Advanced

Significant diversification

The 3 months correlation between Fubon and New is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and New Advanced Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Advanced Electronics and Fubon MSCI 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 Fubon MSCI Taiwan are associated (or correlated) with New Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Advanced Electronics has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and New Advanced go up and down completely randomly.

Pair Corralation between Fubon MSCI and New Advanced

Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the New Advanced. But the etf apears to be less risky and, when comparing its historical volatility, Fubon MSCI Taiwan is 1.75 times less risky than New Advanced. The etf trades about -0.12 of its potential returns per unit of risk. The New Advanced Electronics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,330  in New Advanced Electronics on December 29, 2024 and sell it today you would earn a total of  430.00  from holding New Advanced Electronics or generate 8.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Fubon MSCI Taiwan  vs.  New Advanced Electronics

Fubon MSCI Taiwan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon MSCI Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

New Advanced Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Advanced Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, New Advanced may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fubon MSCI and New Advanced

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

The idea behind Fubon MSCI Taiwan and New Advanced Electronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.