Correlation Between Fubon Financial and Cipherlab
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Cipherlab 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 Cipherlab 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 Cipherlab Co, you can compare the effects of market volatilities on Fubon Financial and Cipherlab 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 Cipherlab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Cipherlab.
Diversification Opportunities for Fubon Financial and Cipherlab
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Cipherlab is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Cipherlab Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipherlab 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 Cipherlab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipherlab has no effect on the direction of Fubon Financial i.e., Fubon Financial and Cipherlab go up and down completely randomly.
Pair Corralation between Fubon Financial and Cipherlab
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.04 times more return on investment than Cipherlab. However, Fubon Financial Holding is 24.3 times less risky than Cipherlab. It trades about 0.22 of its potential returns per unit of risk. Cipherlab Co is currently generating about -0.12 per unit of risk. If you would invest 6,000 in Fubon Financial Holding on September 25, 2024 and sell it today you would earn a total of 20.00 from holding Fubon Financial Holding or generate 0.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Fubon Financial Holding vs. Cipherlab Co
Performance |
Timeline |
Fubon Financial Holding |
Cipherlab |
Fubon Financial and Cipherlab Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Financial and Cipherlab
The main advantage of trading using opposite Fubon Financial and Cipherlab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Cipherlab 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 Cipherlab will offset losses from the drop in Cipherlab's long position.Fubon Financial vs. CTBC Financial Holding | Fubon Financial vs. Khgears International Limited | Fubon Financial vs. Eva Airways Corp | Fubon Financial vs. Realtek Semiconductor Corp |
Cipherlab vs. GeoVision | Cipherlab vs. Flytech Technology Co | Cipherlab vs. Quanta Storage | Cipherlab vs. Coretronic |
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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