Correlation Between Fubon MSCI and Hsinjing Holding

Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Hsinjing Holding 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 Hsinjing Holding 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 Hsinjing Holding Co, you can compare the effects of market volatilities on Fubon MSCI and Hsinjing Holding 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 Hsinjing Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Hsinjing Holding.

Diversification Opportunities for Fubon MSCI and Hsinjing Holding

0.66

Correlation Coefficient

Fubon MSCI  Hsinjing Holding

Poor diversification

The 3 months correlation between Fubon and Hsinjing is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Hsinjing Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hsinjing Holding 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 Hsinjing Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hsinjing Holding has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Hsinjing Holding go up and down completely randomly.

Pair Corralation between Fubon MSCI and Hsinjing Holding

Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the Hsinjing Holding. But the etf apears to be less risky and, when comparing its historical volatility, Fubon MSCI Taiwan is 1.04 times less risky than Hsinjing Holding. The etf trades about -0.12 of its potential returns per unit of risk. The Hsinjing Holding Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,170  in Hsinjing Holding Co on December 30, 2024 and sell it today you would lose (90.00) from holding Hsinjing Holding Co or give up 4.15% of portfolio value over 90 days.

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

Fubon MSCI Taiwan  vs.  Hsinjing Holding Co

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.

Hsinjing Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hsinjing Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hsinjing Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fubon MSCI and Hsinjing Holding

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

The idea behind Fubon MSCI Taiwan and Hsinjing Holding Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.