Correlation Between Fubon Hang and Fubon 1

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Can any of the company-specific risk be diversified away by investing in both Fubon Hang and Fubon 1 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 Fubon 1 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 Fubon 1 3 Years, you can compare the effects of market volatilities on Fubon Hang and Fubon 1 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 Fubon 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Hang and Fubon 1.

Diversification Opportunities for Fubon Hang and Fubon 1

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Fubon and Fubon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Hang Seng and Fubon 1 3 Years in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon 1 3 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 Fubon 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon 1 3 has no effect on the direction of Fubon Hang i.e., Fubon Hang and Fubon 1 go up and down completely randomly.

Pair Corralation between Fubon Hang and Fubon 1

Assuming the 90 days trading horizon Fubon Hang Seng is expected to under-perform the Fubon 1. In addition to that, Fubon Hang is 8.54 times more volatile than Fubon 1 3 Years. It trades about -0.11 of its total potential returns per unit of risk. Fubon 1 3 Years is currently generating about 0.09 per unit of volatility. If you would invest  4,153  in Fubon 1 3 Years on September 17, 2024 and sell it today you would earn a total of  62.00  from holding Fubon 1 3 Years or generate 1.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fubon Hang Seng  vs.  Fubon 1 3 Years

 Performance 
       Timeline  
Fubon Hang Seng 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Fubon 1 3 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fubon 1 3 Years are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fubon 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fubon Hang and Fubon 1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fubon Hang and Fubon 1

The main advantage of trading using opposite Fubon Hang and Fubon 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Hang position performs unexpectedly, Fubon 1 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 1 will offset losses from the drop in Fubon 1's long position.
The idea behind Fubon Hang Seng and Fubon 1 3 Years 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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