Correlation Between Fubon MSCI and KNH Enterprise

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

Diversification Opportunities for Fubon MSCI and KNH Enterprise

0.21

Correlation Coefficient

Fubon MSCI  KNH Enterprise

Modest diversification

The 3 months correlation between Fubon and KNH is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and KNH Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNH Enterprise 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 KNH Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNH Enterprise has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and KNH Enterprise go up and down completely randomly.

Pair Corralation between Fubon MSCI and KNH Enterprise

Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the KNH Enterprise. But the etf apears to be less risky and, when comparing its historical volatility, Fubon MSCI Taiwan is 2.74 times less risky than KNH Enterprise. The etf trades about 0.0 of its potential returns per unit of risk. The KNH Enterprise Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,925  in KNH Enterprise Co on October 20, 2024 and sell it today you would earn a total of  25.00  from holding KNH Enterprise Co or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Fubon MSCI Taiwan  vs.  KNH Enterprise Co

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.

KNH Enterprise

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KNH Enterprise Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, KNH Enterprise 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 KNH Enterprise

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

The idea behind Fubon MSCI Taiwan and KNH Enterprise 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.