Correlation Between Shiny Chemical and Fubon MSCI

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

By analyzing existing cross correlation between Shiny Chemical Industrial and Fubon MSCI Taiwan, you can compare the effects of market volatilities on Shiny Chemical and Fubon MSCI 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 Shiny Chemical with a short position of Fubon MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and Fubon MSCI.

Diversification Opportunities for Shiny Chemical and Fubon MSCI

-0.22

Correlation Coefficient

Shiny Chemical  Fubon MSCI

Very good diversification

The 3 months correlation between Shiny and Fubon is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and Fubon MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon MSCI Taiwan and Shiny Chemical 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 Shiny Chemical Industrial are associated (or correlated) with Fubon MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon MSCI Taiwan has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and Fubon MSCI go up and down completely randomly.

Pair Corralation between Shiny Chemical and Fubon MSCI

Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to under-perform the Fubon MSCI. In addition to that, Shiny Chemical is 1.48 times more volatile than Fubon MSCI Taiwan. It trades about -0.13 of its total potential returns per unit of risk. Fubon MSCI Taiwan is currently generating about 0.06 per unit of volatility. If you would invest  13,840  in Fubon MSCI Taiwan on October 6, 2024 and sell it today you would earn a total of  550.00  from holding Fubon MSCI Taiwan or generate 3.97% return on investment over 90 days.

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

Shiny Chemical Industrial  vs.  Fubon MSCI Taiwan

Shiny Chemical Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shiny Chemical Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Fubon MSCI Taiwan

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon MSCI Taiwan are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Fubon MSCI is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Shiny Chemical and Fubon MSCI

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

The idea behind Shiny Chemical Industrial and Fubon MSCI Taiwan 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.