Correlation Between Fubon Financial and Taiwan Cement
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Taiwan Cement 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 Taiwan Cement 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 Taiwan Cement Corp, you can compare the effects of market volatilities on Fubon Financial and Taiwan Cement 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 Taiwan Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Taiwan Cement.
Diversification Opportunities for Fubon Financial and Taiwan Cement
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fubon and Taiwan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Taiwan Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cement Corp 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 Taiwan Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cement Corp has no effect on the direction of Fubon Financial i.e., Fubon Financial and Taiwan Cement go up and down completely randomly.
Pair Corralation between Fubon Financial and Taiwan Cement
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.66 times more return on investment than Taiwan Cement. However, Fubon Financial Holding is 1.5 times less risky than Taiwan Cement. It trades about 0.16 of its potential returns per unit of risk. Taiwan Cement Corp is currently generating about 0.1 per unit of risk. If you would invest 6,220 in Fubon Financial Holding on October 15, 2024 and sell it today you would earn a total of 70.00 from holding Fubon Financial Holding or generate 1.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fubon Financial Holding vs. Taiwan Cement Corp
Performance |
Timeline |
Fubon Financial Holding |
Taiwan Cement Corp |
Fubon Financial and Taiwan Cement Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Financial and Taiwan Cement
The main advantage of trading using opposite Fubon Financial and Taiwan Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Taiwan Cement 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 Taiwan Cement will offset losses from the drop in Taiwan Cement's long position.Fubon Financial vs. Sinopower Semiconductor | Fubon Financial vs. Landis Taipei Hotel | Fubon Financial vs. Camellia Metal Co | Fubon Financial vs. FDC International Hotels |
Taiwan Cement vs. Taiwan Cement Corp | Taiwan Cement vs. Asia Cement Corp | Taiwan Cement vs. Goldsun Building Materials | Taiwan Cement vs. Universal Cement Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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