Correlation Between Fubon SP and Fubon SSE180

Can any of the company-specific risk be diversified away by investing in both Fubon SP and Fubon SSE180 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 SP and Fubon SSE180 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fubon SP Preferred and Fubon SSE180 Exchange, you can compare the effects of market volatilities on Fubon SP and Fubon SSE180 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 SP with a short position of Fubon SSE180. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon SP and Fubon SSE180.

Diversification Opportunities for Fubon SP and Fubon SSE180

-0.12

Correlation Coefficient

Fubon SP  Fubon SSE180

Good diversification

The 3 months correlation between Fubon and Fubon is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fubon SP Preferred and Fubon SSE180 Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon SSE180 Exchange and Fubon SP 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 SP Preferred are associated (or correlated) with Fubon SSE180. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon SSE180 Exchange has no effect on the direction of Fubon SP i.e., Fubon SP and Fubon SSE180 go up and down completely randomly.

Pair Corralation between Fubon SP and Fubon SSE180

Assuming the 90 days trading horizon Fubon SP Preferred is expected to under-perform the Fubon SSE180. But the etf apears to be less risky and, when comparing its historical volatility, Fubon SP Preferred is 2.02 times less risky than Fubon SSE180. The etf trades about -0.02 of its potential returns per unit of risk. The Fubon SSE180 Exchange is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  750.00  in Fubon SSE180 Exchange on October 27, 2024 and sell it today you would lose (9.00) from holding Fubon SSE180 Exchange or give up 1.2% of portfolio value over 90 days.

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

Fubon SP Preferred  vs.  Fubon SSE180 Exchange

Fubon SP Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fubon SSE180 Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fubon SSE180 Exchange has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fubon SSE180 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fubon SP and Fubon SSE180

The main advantage of trading using opposite Fubon SP and Fubon SSE180 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon SP position performs unexpectedly, Fubon SSE180 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 SSE180 will offset losses from the drop in Fubon SSE180's long position.

The idea behind Fubon SP Preferred and Fubon SSE180 Exchange 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.