Correlation Between Fubon MSCI and P Duke

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

Diversification Opportunities for Fubon MSCI and P Duke

0.2

Correlation Coefficient

Fubon MSCI  P Duke

Modest diversification

The 3 months correlation between Fubon and 8109 is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and P Duke Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P Duke Technology 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 P Duke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P Duke Technology has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and P Duke go up and down completely randomly.

Pair Corralation between Fubon MSCI and P Duke

Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the P Duke. In addition to that, Fubon MSCI is 1.2 times more volatile than P Duke Technology Co. It trades about -0.12 of its total potential returns per unit of risk. P Duke Technology Co is currently generating about -0.03 per unit of volatility. If you would invest  9,020  in P Duke Technology Co on December 29, 2024 and sell it today you would lose (210.00) from holding P Duke Technology Co or give up 2.33% of portfolio value over 90 days.

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

Fubon MSCI Taiwan  vs.  P Duke Technology 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.

P Duke Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days P Duke Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, P Duke 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 P Duke

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

The idea behind Fubon MSCI Taiwan and P Duke Technology 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.