Correlation Between Grand Ocean and Fubon Financial

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

By analyzing existing cross correlation between Grand Ocean Retail and Fubon Financial Holding, you can compare the effects of market volatilities on Grand Ocean and Fubon Financial 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 Grand Ocean with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and Fubon Financial.

Diversification Opportunities for Grand Ocean and Fubon Financial

0.65

Correlation Coefficient

Grand Ocean  Fubon Financial

Poor diversification

The 3 months correlation between Grand and Fubon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial Holding and Grand Ocean 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 Grand Ocean Retail are associated (or correlated) with Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of Grand Ocean i.e., Grand Ocean and Fubon Financial go up and down completely randomly.

Pair Corralation between Grand Ocean and Fubon Financial

Assuming the 90 days trading horizon Grand Ocean Retail is expected to generate 48.04 times more return on investment than Fubon Financial. However, Grand Ocean is 48.04 times more volatile than Fubon Financial Holding. It trades about 0.18 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.34 per unit of risk. If you would invest  837.00  in Grand Ocean Retail on September 12, 2024 and sell it today you would earn a total of  483.00  from holding Grand Ocean Retail or generate 57.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Grand Ocean Retail  vs.  Fubon Financial Holding

Grand Ocean Retail

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Ocean Retail are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Grand Ocean showed solid returns over the last few months and may actually be approaching a breakup point.

Fubon Financial Holding

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon Financial Holding are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fubon Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grand Ocean and Fubon Financial

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

The idea behind Grand Ocean Retail and Fubon Financial Holding 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.