Correlation Between Fubon SSE180 and Fubon Hang

Can any of the company-specific risk be diversified away by investing in both Fubon SSE180 and Fubon Hang 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 SSE180 and Fubon Hang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fubon SSE180 Exchange and Fubon Hang Seng, you can compare the effects of market volatilities on Fubon SSE180 and Fubon Hang 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 SSE180 with a short position of Fubon Hang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon SSE180 and Fubon Hang.

Diversification Opportunities for Fubon SSE180 and Fubon Hang

-0.28

Correlation Coefficient

Fubon SSE180  Fubon Hang

Very good diversification

The 3 months correlation between Fubon and Fubon is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fubon SSE180 Exchange and Fubon Hang Seng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Hang Seng and Fubon SSE180 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 SSE180 Exchange are associated (or correlated) with Fubon Hang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Hang Seng has no effect on the direction of Fubon SSE180 i.e., Fubon SSE180 and Fubon Hang go up and down completely randomly.

Pair Corralation between Fubon SSE180 and Fubon Hang

Assuming the 90 days trading horizon Fubon SSE180 Exchange is expected to under-perform the Fubon Hang. But the etf apears to be less risky and, when comparing its historical volatility, Fubon SSE180 Exchange is 1.27 times less risky than Fubon Hang. The etf trades about -0.22 of its potential returns per unit of risk. The Fubon Hang Seng is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,213  in Fubon Hang Seng on October 12, 2024 and sell it today you would earn a total of  57.00  from holding Fubon Hang Seng or generate 4.7% return on investment over 90 days.

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

Fubon SSE180 Exchange  vs.  Fubon Hang Seng

Fubon SSE180 Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fubon SSE180 Exchange has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fubon SSE180 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fubon Hang Seng

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon Hang Seng are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fubon Hang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fubon SSE180 and Fubon Hang

The main advantage of trading using opposite Fubon SSE180 and Fubon Hang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon SSE180 position performs unexpectedly, Fubon Hang 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 Fubon Hang will offset losses from the drop in Fubon Hang's long position.

The idea behind Fubon SSE180 Exchange and Fubon Hang Seng 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.