Correlation Between Fubon Financial and Century Iron

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

Diversification Opportunities for Fubon Financial and Century Iron

0.76

Correlation Coefficient

Fubon Financial  Century Iron

Poor diversification

The 3 months correlation between Fubon and Century is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Century Iron And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Iron And 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 Century Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Iron And has no effect on the direction of Fubon Financial i.e., Fubon Financial and Century Iron go up and down completely randomly.

Pair Corralation between Fubon Financial and Century Iron

Assuming the 90 days trading horizon Fubon Financial is expected to generate 4.48 times less return on investment than Century Iron. But when comparing it to its historical volatility, Fubon Financial Holding is 17.97 times less risky than Century Iron. It trades about 0.18 of its potential returns per unit of risk. Century Iron And is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16,650  in Century Iron And on December 30, 2024 and sell it today you would earn a total of  800.00  from holding Century Iron And or generate 4.8% return on investment over 90 days.

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

Fubon Financial Holding  vs.  Century Iron And

Fubon Financial Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon Financial Holding are ranked lower than 14 (%) 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.

Century Iron And

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Century Iron And are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Century Iron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fubon Financial and Century Iron

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

The idea behind Fubon Financial Holding and Century Iron And 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.