Correlation Between Fubon TWSE and Fubon Hang
Can any of the company-specific risk be diversified away by investing in both Fubon TWSE 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 TWSE 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 TWSE Corporate and Fubon Hang Seng, you can compare the effects of market volatilities on Fubon TWSE 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 TWSE with a short position of Fubon Hang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon TWSE and Fubon Hang.
Diversification Opportunities for Fubon TWSE and Fubon Hang
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and Fubon is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fubon TWSE Corporate 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 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 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 TWSE i.e., Fubon TWSE and Fubon Hang go up and down completely randomly.
Pair Corralation between Fubon TWSE and Fubon Hang
Assuming the 90 days trading horizon Fubon TWSE Corporate is expected to generate 0.62 times more return on investment than Fubon Hang. However, Fubon TWSE Corporate is 1.6 times less risky than Fubon Hang. It trades about 0.13 of its potential returns per unit of risk. Fubon Hang Seng is currently generating about -0.05 per unit of risk. If you would invest 4,386 in Fubon TWSE Corporate on September 18, 2024 and sell it today you would earn a total of 111.00 from holding Fubon TWSE Corporate or generate 2.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fubon TWSE Corporate vs. Fubon Hang Seng
Performance |
Timeline |
Fubon TWSE Corporate |
Fubon Hang Seng |
Fubon TWSE and Fubon Hang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon TWSE and Fubon Hang
The main advantage of trading using opposite Fubon TWSE and Fubon Hang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon TWSE 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.Fubon TWSE vs. Fubon Hang Seng | Fubon TWSE vs. Fubon SP Preferred | Fubon TWSE vs. Fubon NASDAQ 100 1X | Fubon TWSE vs. Fubon Dow Jones |
Fubon Hang vs. Fubon SP Preferred | Fubon Hang vs. Fubon NASDAQ 100 1X | Fubon Hang vs. Fubon TWSE Corporate | Fubon Hang vs. Fubon Dow Jones |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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