Correlation Between Excelsior Medical and Fubon Taiwan

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

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

Diversification Opportunities for Excelsior Medical and Fubon Taiwan

-0.08

Correlation Coefficient

Excelsior Medical  Fubon Taiwan

Good diversification

The 3 months correlation between Excelsior and Fubon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co 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 Excelsior Medical 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 Excelsior Medical Co 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 Excelsior Medical i.e., Excelsior Medical and Fubon Taiwan go up and down completely randomly.

Pair Corralation between Excelsior Medical and Fubon Taiwan

Assuming the 90 days trading horizon Excelsior Medical is expected to generate 1.93 times less return on investment than Fubon Taiwan. But when comparing it to its historical volatility, Excelsior Medical Co is 4.03 times less risky than Fubon Taiwan. It trades about 0.12 of its potential returns per unit of risk. Fubon Taiwan Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  18,925  in Fubon Taiwan Technology on September 15, 2024 and sell it today you would earn a total of  270.00  from holding Fubon Taiwan Technology or generate 1.43% return on investment over 90 days.

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

Excelsior Medical Co  vs.  Fubon Taiwan Technology

Excelsior Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Excelsior Medical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Excelsior Medical 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 abnormal basic indicators, Fubon Taiwan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Excelsior Medical and Fubon Taiwan

The main advantage of trading using opposite Excelsior Medical and Fubon Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelsior Medical 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 Excelsior Medical Co 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.