Correlation Between Fubon MSCI and Asia Tech

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

Diversification Opportunities for Fubon MSCI and Asia Tech

0.56

Correlation Coefficient

Fubon MSCI  Asia Tech

Very weak diversification

The 3 months correlation between Fubon and Asia is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Asia Tech Image in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Tech Image 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 Asia Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Tech Image has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Asia Tech go up and down completely randomly.

Pair Corralation between Fubon MSCI and Asia Tech

Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the Asia Tech. But the etf apears to be less risky and, when comparing its historical volatility, Fubon MSCI Taiwan is 3.08 times less risky than Asia Tech. The etf trades about 0.0 of its potential returns per unit of risk. The Asia Tech Image is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,970  in Asia Tech Image on October 20, 2024 and sell it today you would earn a total of  580.00  from holding Asia Tech Image or generate 5.82% return on investment over 90 days.

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

Fubon MSCI Taiwan  vs.  Asia Tech Image

Fubon MSCI Taiwan

Risk-Adjusted Performance

0 of 100

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 fairly stable basic indicators, Fubon MSCI is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Asia Tech Image

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Tech Image are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asia Tech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fubon MSCI and Asia Tech

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

The idea behind Fubon MSCI Taiwan and Asia Tech Image 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.