Correlation Between Fubon Financial and Onyx Healthcare
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Onyx Healthcare 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 Onyx Healthcare 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 Onyx Healthcare, you can compare the effects of market volatilities on Fubon Financial and Onyx Healthcare 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 Onyx Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Onyx Healthcare.
Diversification Opportunities for Fubon Financial and Onyx Healthcare
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Onyx is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare 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 Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of Fubon Financial i.e., Fubon Financial and Onyx Healthcare go up and down completely randomly.
Pair Corralation between Fubon Financial and Onyx Healthcare
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.05 times more return on investment than Onyx Healthcare. However, Fubon Financial Holding is 21.87 times less risky than Onyx Healthcare. It trades about 0.21 of its potential returns per unit of risk. Onyx Healthcare is currently generating about -0.17 per unit of risk. If you would invest 6,000 in Fubon Financial Holding on September 26, 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 | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fubon Financial Holding vs. Onyx Healthcare
Performance |
Timeline |
Fubon Financial Holding |
Onyx Healthcare |
Fubon Financial and Onyx Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Financial and Onyx Healthcare
The main advantage of trading using opposite Fubon Financial and Onyx Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Onyx Healthcare 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 Onyx Healthcare will offset losses from the drop in Onyx Healthcare'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 |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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