Correlation Between Fubon TWSE and YuantaP Shares

Can any of the company-specific risk be diversified away by investing in both Fubon TWSE 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 TWSE 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 TWSE Corporate and YuantaP shares MSCI Taiwan, you can compare the effects of market volatilities on Fubon TWSE 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 TWSE with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon TWSE and YuantaP Shares.

Diversification Opportunities for Fubon TWSE and YuantaP Shares

0.42

Correlation Coefficient

Fubon TWSE  YuantaP Shares

Very weak diversification

The 3 months correlation between Fubon and YuantaP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fubon TWSE Corporate and YuantaP shares MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares MSCI and Fubon TWSE 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 TWSE Corporate 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 MSCI has no effect on the direction of Fubon TWSE i.e., Fubon TWSE and YuantaP Shares go up and down completely randomly.

Pair Corralation between Fubon TWSE and YuantaP Shares

Assuming the 90 days trading horizon Fubon TWSE Corporate is expected to generate 1.22 times more return on investment than YuantaP Shares. However, Fubon TWSE is 1.22 times more volatile than YuantaP shares MSCI Taiwan. It trades about 0.1 of its potential returns per unit of risk. YuantaP shares MSCI Taiwan is currently generating about 0.01 per unit of risk. If you would invest  4,212  in Fubon TWSE Corporate on September 16, 2024 and sell it today you would earn a total of  269.00  from holding Fubon TWSE Corporate or generate 6.39% return on investment over 90 days.

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

Fubon TWSE Corporate  vs.  YuantaP shares MSCI Taiwan

Fubon TWSE Corporate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon TWSE Corporate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Fubon TWSE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

YuantaP shares MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YuantaP shares MSCI Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, YuantaP Shares 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 TWSE and YuantaP Shares

The main advantage of trading using opposite Fubon TWSE and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon TWSE 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 TWSE Corporate and YuantaP shares MSCI Taiwan 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.