Correlation Between Fubon Financial and Taiwan Hopax

Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Taiwan Hopax 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 Hopax 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 Hopax Chemsistry, you can compare the effects of market volatilities on Fubon Financial and Taiwan Hopax 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 Hopax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Taiwan Hopax.

Diversification Opportunities for Fubon Financial and Taiwan Hopax

-0.6

Correlation Coefficient

Fubon Financial  Taiwan Hopax

Excellent diversification

The 3 months correlation between Fubon and Taiwan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Taiwan Hopax Chemsistry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Hopax Chemsistry 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 Hopax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Hopax Chemsistry has no effect on the direction of Fubon Financial i.e., Fubon Financial and Taiwan Hopax go up and down completely randomly.

Pair Corralation between Fubon Financial and Taiwan Hopax

If you would invest  6,310  in Fubon Financial Holding on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Fubon Financial Holding or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Fubon Financial Holding  vs.  Taiwan Hopax Chemsistry

Fubon Financial Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon Financial Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fubon Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Taiwan Hopax Chemsistry

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fubon Financial and Taiwan Hopax

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

The idea behind Fubon Financial Holding and Taiwan Hopax Chemsistry 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.