Correlation Between Fubon Financial and Evergreen International

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

By analyzing existing cross correlation between Fubon Financial Holding and Evergreen International Storage, you can compare the effects of market volatilities on Fubon Financial and Evergreen International 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 Financial with a short position of Evergreen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Evergreen International.

Diversification Opportunities for Fubon Financial and Evergreen International

-0.66

Correlation Coefficient

Fubon Financial  Evergreen International

Excellent diversification

The 3 months correlation between Fubon and Evergreen is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Evergreen International Storag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen International and Fubon Financial 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 Financial Holding are associated (or correlated) with Evergreen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen International has no effect on the direction of Fubon Financial i.e., Fubon Financial and Evergreen International go up and down completely randomly.

Pair Corralation between Fubon Financial and Evergreen International

Assuming the 90 days trading horizon Fubon Financial Holding is expected to under-perform the Evergreen International. But the stock apears to be less risky and, when comparing its historical volatility, Fubon Financial Holding is 1.24 times less risky than Evergreen International. The stock trades about -0.06 of its potential returns per unit of risk. The Evergreen International Storage is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,105  in Evergreen International Storage on December 30, 2024 and sell it today you would earn a total of  95.00  from holding Evergreen International Storage or generate 3.06% return on investment over 90 days.

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

Fubon Financial Holding  vs.  Evergreen International Storag

Fubon Financial Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fubon Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Evergreen International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen International Storage are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Evergreen International 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 Fubon Financial and Evergreen International

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

The idea behind Fubon Financial Holding and Evergreen International Storage 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.