Correlation Between Coxon Precise and Fubon Taiwan

Can any of the company-specific risk be diversified away by investing in both Coxon Precise and Fubon Taiwan 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 Coxon Precise and Fubon Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coxon Precise Industrial and Fubon Taiwan Technology, you can compare the effects of market volatilities on Coxon Precise and Fubon Taiwan 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 Coxon Precise with a short position of Fubon Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coxon Precise and Fubon Taiwan.

Diversification Opportunities for Coxon Precise and Fubon Taiwan

0.14

Correlation Coefficient

Coxon Precise  Fubon Taiwan

Average diversification

The 3 months correlation between Coxon and Fubon is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Coxon Precise Industrial and Fubon Taiwan Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Taiwan Technology and Coxon Precise 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 Coxon Precise Industrial are associated (or correlated) with Fubon Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Taiwan Technology has no effect on the direction of Coxon Precise i.e., Coxon Precise and Fubon Taiwan go up and down completely randomly.

Pair Corralation between Coxon Precise and Fubon Taiwan

Assuming the 90 days trading horizon Coxon Precise Industrial is expected to under-perform the Fubon Taiwan. In addition to that, Coxon Precise is 1.84 times more volatile than Fubon Taiwan Technology. It trades about -0.33 of its total potential returns per unit of risk. Fubon Taiwan Technology is currently generating about 0.14 per unit of volatility. If you would invest  19,135  in Fubon Taiwan Technology on October 11, 2024 and sell it today you would earn a total of  675.00  from holding Fubon Taiwan Technology or generate 3.53% return on investment over 90 days.

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

Coxon Precise Industrial  vs.  Fubon Taiwan Technology

Coxon Precise Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coxon Precise Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Fubon Taiwan Technology

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon Taiwan Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Fubon Taiwan is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Coxon Precise and Fubon Taiwan

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

The idea behind Coxon Precise Industrial and Fubon Taiwan Technology 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..