Correlation Between Fubon Financial and Edom Technology
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Edom Technology 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 Edom Technology 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 Edom Technology Co, you can compare the effects of market volatilities on Fubon Financial and Edom Technology 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 Edom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Edom Technology.
Diversification Opportunities for Fubon Financial and Edom Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Edom is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Edom Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edom Technology 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 Edom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edom Technology has no effect on the direction of Fubon Financial i.e., Fubon Financial and Edom Technology go up and down completely randomly.
Pair Corralation between Fubon Financial and Edom Technology
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.07 times more return on investment than Edom Technology. However, Fubon Financial Holding is 15.2 times less risky than Edom Technology. It trades about 0.38 of its potential returns per unit of risk. Edom Technology Co is currently generating about -0.06 per unit of risk. If you would invest 6,010 in Fubon Financial Holding on December 2, 2024 and sell it today you would earn a total of 130.00 from holding Fubon Financial Holding or generate 2.16% 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. Edom Technology Co
Performance |
Timeline |
Fubon Financial Holding |
Edom Technology |
Fubon Financial and Edom Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Financial and Edom Technology
The main advantage of trading using opposite Fubon Financial and Edom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Edom Technology 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 Edom Technology will offset losses from the drop in Edom Technology's long position.Fubon Financial vs. ANJI Technology Co | Fubon Financial vs. Sun Max Tech | Fubon Financial vs. An Shin Food Services | Fubon Financial vs. Wei Chuan Foods |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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