Correlation Between Fubon Financial and Air Asia
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Air Asia 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 Air Asia 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 Air Asia Co, you can compare the effects of market volatilities on Fubon Financial and Air Asia 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 Air Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Air Asia.
Diversification Opportunities for Fubon Financial and Air Asia
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Air is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Air Asia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Asia 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 Air Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Asia has no effect on the direction of Fubon Financial i.e., Fubon Financial and Air Asia go up and down completely randomly.
Pair Corralation between Fubon Financial and Air Asia
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.05 times more return on investment than Air Asia. However, Fubon Financial Holding is 21.76 times less risky than Air Asia. It trades about 0.31 of its potential returns per unit of risk. Air Asia Co is currently generating about 0.0 per unit of risk. If you would invest 6,180 in Fubon Financial Holding on September 16, 2024 and sell it today you would earn a total of 120.00 from holding Fubon Financial Holding or generate 1.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fubon Financial Holding vs. Air Asia Co
Performance |
Timeline |
Fubon Financial Holding |
Air Asia |
Fubon Financial and Air Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Financial and Air Asia
The main advantage of trading using opposite Fubon Financial and Air Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Air Asia 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 Air Asia will offset losses from the drop in Air Asia's long position.Fubon Financial vs. Cathay Financial Holding | ||
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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