Correlation Between Fubon MSCI and Tong Tai
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Tong Tai 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 Tong Tai 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 Tong Tai Machine Tool, you can compare the effects of market volatilities on Fubon MSCI and Tong Tai 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 Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Tong Tai.
Diversification Opportunities for Fubon MSCI and Tong Tai
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Tong is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine 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 Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Tong Tai go up and down completely randomly.
Pair Corralation between Fubon MSCI and Tong Tai
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.39 times more return on investment than Tong Tai. However, Fubon MSCI Taiwan is 2.56 times less risky than Tong Tai. It trades about 0.12 of its potential returns per unit of risk. Tong Tai Machine Tool is currently generating about -0.06 per unit of risk. If you would invest 13,195 in Fubon MSCI Taiwan on September 13, 2024 and sell it today you would earn a total of 1,170 from holding Fubon MSCI Taiwan or generate 8.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Fubon MSCI Taiwan vs. Tong Tai Machine Tool
Performance |
Timeline |
Fubon MSCI Taiwan |
Tong Tai Machine |
Fubon MSCI and Tong Tai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon MSCI and Tong Tai
The main advantage of trading using opposite Fubon MSCI and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai's long position.Fubon MSCI vs. YuantaP shares Taiwan Top | Fubon MSCI vs. Yuanta Daily Taiwan | Fubon MSCI vs. Cathay Taiwan 5G | Fubon MSCI vs. Yuanta Daily CSI |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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