Correlation Between Fuh Hwa and Yuanta 10

Can any of the company-specific risk be diversified away by investing in both Fuh Hwa and Yuanta 10 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 Fuh Hwa and Yuanta 10 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fuh Hwa FTSE and Yuanta 10 Investment, you can compare the effects of market volatilities on Fuh Hwa and Yuanta 10 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 Fuh Hwa with a short position of Yuanta 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuh Hwa and Yuanta 10.

Diversification Opportunities for Fuh Hwa and Yuanta 10

0.59

Correlation Coefficient

Fuh Hwa  Yuanta 10

Very weak diversification

The 3 months correlation between Fuh and Yuanta is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fuh Hwa FTSE and Yuanta 10 Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta 10 Investment and Fuh Hwa 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 Fuh Hwa FTSE are associated (or correlated) with Yuanta 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta 10 Investment has no effect on the direction of Fuh Hwa i.e., Fuh Hwa and Yuanta 10 go up and down completely randomly.

Pair Corralation between Fuh Hwa and Yuanta 10

Assuming the 90 days trading horizon Fuh Hwa FTSE is expected to generate 1.54 times more return on investment than Yuanta 10. However, Fuh Hwa is 1.54 times more volatile than Yuanta 10 Investment. It trades about 0.14 of its potential returns per unit of risk. Yuanta 10 Investment is currently generating about 0.05 per unit of risk. If you would invest  938.00  in Fuh Hwa FTSE on December 25, 2024 and sell it today you would earn a total of  60.00  from holding Fuh Hwa FTSE or generate 6.4% return on investment over 90 days.

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

Fuh Hwa FTSE  vs.  Yuanta 10 Investment

Fuh Hwa FTSE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuh Hwa FTSE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fuh Hwa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Yuanta 10 Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta 10 Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Yuanta 10 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fuh Hwa and Yuanta 10

The main advantage of trading using opposite Fuh Hwa and Yuanta 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuh Hwa position performs unexpectedly, Yuanta 10 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 Yuanta 10 will offset losses from the drop in Yuanta 10's long position.

The idea behind Fuh Hwa FTSE and Yuanta 10 Investment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.