Correlation Between Fubon Hang and YuantaP Shares

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

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

Diversification Opportunities for Fubon Hang and YuantaP Shares

-0.77

Correlation Coefficient

Fubon Hang  YuantaP Shares

Pay attention - limited upside

The 3 months correlation between Fubon and YuantaP is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Hang Seng and YuantaP shares Taiwan Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan and Fubon Hang 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 Hang Seng are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of Fubon Hang i.e., Fubon Hang and YuantaP Shares go up and down completely randomly.

Pair Corralation between Fubon Hang and YuantaP Shares

Assuming the 90 days trading horizon Fubon Hang Seng is expected to under-perform the YuantaP Shares. In addition to that, Fubon Hang is 2.05 times more volatile than YuantaP shares Taiwan Top. It trades about -0.11 of its total potential returns per unit of risk. YuantaP shares Taiwan Top is currently generating about 0.14 per unit of volatility. If you would invest  17,785  in YuantaP shares Taiwan Top on September 17, 2024 and sell it today you would earn a total of  1,825  from holding YuantaP shares Taiwan Top or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Fubon Hang Seng  vs.  YuantaP shares Taiwan Top

Fubon Hang Seng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fubon Hang Seng has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

YuantaP shares Taiwan

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Top are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, YuantaP Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fubon Hang and YuantaP Shares

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

The idea behind Fubon Hang Seng and YuantaP shares Taiwan Top 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.