Correlation Between Jentech Precision and Fubon Taiwan

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

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

Diversification Opportunities for Jentech Precision and Fubon Taiwan

0.79

Correlation Coefficient

Jentech Precision  Fubon Taiwan

Poor diversification

The 3 months correlation between Jentech and Fubon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jentech Precision 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 Jentech Precision 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 Jentech Precision 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 Jentech Precision i.e., Jentech Precision and Fubon Taiwan go up and down completely randomly.

Pair Corralation between Jentech Precision and Fubon Taiwan

Assuming the 90 days trading horizon Jentech Precision is expected to generate 3.14 times less return on investment than Fubon Taiwan. In addition to that, Jentech Precision is 2.35 times more volatile than Fubon Taiwan Technology. It trades about 0.02 of its total potential returns per unit of risk. Fubon Taiwan Technology is currently generating about 0.12 per unit of volatility. If you would invest  18,365  in Fubon Taiwan Technology on October 8, 2024 and sell it today you would earn a total of  1,630  from holding Fubon Taiwan Technology or generate 8.88% return on investment over 90 days.

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

Jentech Precision Industrial  vs.  Fubon Taiwan Technology

Jentech Precision

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jentech Precision Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Jentech Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fubon Taiwan Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon Taiwan Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Fubon Taiwan may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jentech Precision and Fubon Taiwan

The main advantage of trading using opposite Jentech Precision and Fubon Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jentech Precision 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 Jentech Precision 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 Transaction History module to view history of all your transactions and understand their impact on performance.