Correlation Between Fubon 1 and Fubon NIFTY

Can any of the company-specific risk be diversified away by investing in both Fubon 1 and Fubon NIFTY 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 1 and Fubon NIFTY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fubon 1 3 Years and Fubon NIFTY, you can compare the effects of market volatilities on Fubon 1 and Fubon NIFTY 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 1 with a short position of Fubon NIFTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon 1 and Fubon NIFTY.

Diversification Opportunities for Fubon 1 and Fubon NIFTY

-0.54

Correlation Coefficient

Fubon 1  Fubon NIFTY

Excellent diversification

The 3 months correlation between Fubon and Fubon is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fubon 1 3 Years and Fubon NIFTY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon NIFTY and Fubon 1 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 1 3 Years are associated (or correlated) with Fubon NIFTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon NIFTY has no effect on the direction of Fubon 1 i.e., Fubon 1 and Fubon NIFTY go up and down completely randomly.

Pair Corralation between Fubon 1 and Fubon NIFTY

Assuming the 90 days trading horizon Fubon 1 3 Years is expected to generate 0.37 times more return on investment than Fubon NIFTY. However, Fubon 1 3 Years is 2.71 times less risky than Fubon NIFTY. It trades about 0.17 of its potential returns per unit of risk. Fubon NIFTY is currently generating about -0.01 per unit of risk. If you would invest  4,221  in Fubon 1 3 Years on December 30, 2024 and sell it today you would earn a total of  115.00  from holding Fubon 1 3 Years or generate 2.72% return on investment over 90 days.

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

Fubon 1 3 Years  vs.  Fubon NIFTY

Fubon 1 3

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon 1 3 Years are ranked lower than 13 (%) 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 NIFTY

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon NIFTY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fubon NIFTY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fubon 1 and Fubon NIFTY

The main advantage of trading using opposite Fubon 1 and Fubon NIFTY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon 1 position performs unexpectedly, Fubon NIFTY 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 NIFTY will offset losses from the drop in Fubon NIFTY's long position.

The idea behind Fubon 1 3 Years and Fubon NIFTY 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.