Correlation Between Fubon Dow and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both Fubon Dow and YuantaP Shares 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 Dow and YuantaP Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon Dow Jones and YuantaP shares MSCI Taiwan, you can compare the effects of market volatilities on Fubon Dow and YuantaP Shares 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 Dow with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Dow and YuantaP Shares.
Diversification Opportunities for Fubon Dow and YuantaP Shares
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and YuantaP is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Dow Jones and YuantaP shares MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares MSCI and Fubon Dow 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 Dow Jones are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares MSCI has no effect on the direction of Fubon Dow i.e., Fubon Dow and YuantaP Shares go up and down completely randomly.
Pair Corralation between Fubon Dow and YuantaP Shares
Assuming the 90 days trading horizon Fubon Dow is expected to generate 1.64 times less return on investment than YuantaP Shares. But when comparing it to its historical volatility, Fubon Dow Jones is 1.4 times less risky than YuantaP Shares. It trades about 0.06 of its potential returns per unit of risk. YuantaP shares MSCI Taiwan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,100 in YuantaP shares MSCI Taiwan on September 26, 2024 and sell it today you would earn a total of 140.00 from holding YuantaP shares MSCI Taiwan or generate 1.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fubon Dow Jones vs. YuantaP shares MSCI Taiwan
Performance |
Timeline |
Fubon Dow Jones |
YuantaP shares MSCI |
Fubon Dow and YuantaP Shares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Dow and YuantaP Shares
The main advantage of trading using opposite Fubon Dow and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Dow position performs unexpectedly, YuantaP Shares 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 YuantaP Shares will offset losses from the drop in YuantaP Shares' long position.Fubon Dow vs. YuantaP shares Taiwan Top | Fubon Dow vs. Yuanta Daily Taiwan | Fubon Dow vs. Cathay Taiwan 5G | Fubon Dow vs. Cathay Sustainability High |
YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. Yuanta Daily Taiwan | YuantaP Shares vs. Cathay Taiwan 5G | YuantaP Shares vs. Cathay Sustainability High |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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