Correlation Between Fubon TWSE and Fubon FTSE

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

Diversification Opportunities for Fubon TWSE and Fubon FTSE

-0.9

Correlation Coefficient

Fubon TWSE  Fubon FTSE

Pay attention - limited upside

The 3 months correlation between Fubon and Fubon is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fubon TWSE Corporate and Fubon FTSE Vietnam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon FTSE Vietnam 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 FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon FTSE Vietnam has no effect on the direction of Fubon TWSE i.e., Fubon TWSE and Fubon FTSE go up and down completely randomly.

Pair Corralation between Fubon TWSE and Fubon FTSE

Assuming the 90 days trading horizon Fubon TWSE Corporate is expected to under-perform the Fubon FTSE. In addition to that, Fubon TWSE is 1.75 times more volatile than Fubon FTSE Vietnam. It trades about -0.12 of its total potential returns per unit of risk. Fubon FTSE Vietnam is currently generating about 0.19 per unit of volatility. If you would invest  1,168  in Fubon FTSE Vietnam on December 29, 2024 and sell it today you would earn a total of  86.00  from holding Fubon FTSE Vietnam or generate 7.36% return on investment over 90 days.

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

Fubon TWSE Corporate  vs.  Fubon FTSE Vietnam

Fubon TWSE Corporate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon TWSE Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Fubon FTSE Vietnam

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon FTSE Vietnam are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fubon FTSE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fubon TWSE and Fubon FTSE

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

The idea behind Fubon TWSE Corporate and Fubon FTSE Vietnam 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.