Correlation Between Deltamac Taiwan and Fubon MSCI

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

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

Diversification Opportunities for Deltamac Taiwan and Fubon MSCI

0.54

Correlation Coefficient

Deltamac Taiwan  Fubon MSCI

Very weak diversification

The 3 months correlation between Deltamac and Fubon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Deltamac Taiwan Co and Fubon MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon MSCI Taiwan and Deltamac Taiwan 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 Deltamac Taiwan Co are associated (or correlated) with Fubon MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon MSCI Taiwan has no effect on the direction of Deltamac Taiwan i.e., Deltamac Taiwan and Fubon MSCI go up and down completely randomly.

Pair Corralation between Deltamac Taiwan and Fubon MSCI

Assuming the 90 days trading horizon Deltamac Taiwan Co is expected to generate 3.72 times more return on investment than Fubon MSCI. However, Deltamac Taiwan is 3.72 times more volatile than Fubon MSCI Taiwan. It trades about -0.02 of its potential returns per unit of risk. Fubon MSCI Taiwan is currently generating about -0.12 per unit of risk. If you would invest  3,120  in Deltamac Taiwan Co on December 30, 2024 and sell it today you would lose (310.00) from holding Deltamac Taiwan Co or give up 9.94% of portfolio value over 90 days.

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

Deltamac Taiwan Co  vs.  Fubon MSCI Taiwan

Deltamac Taiwan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deltamac Taiwan Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Deltamac Taiwan is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fubon MSCI Taiwan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon MSCI Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Deltamac Taiwan and Fubon MSCI

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

The idea behind Deltamac Taiwan Co and Fubon MSCI Taiwan 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.