Correlation Between Provision Information and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Provision Information 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 Provision Information and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Provision Information CoLtd and Fubon Financial Holding, you can compare the effects of market volatilities on Provision Information 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 Provision Information with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provision Information and Fubon Financial.
Diversification Opportunities for Provision Information and Fubon Financial
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Provision and Fubon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Provision Information CoLtd 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 Provision Information 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 Provision Information CoLtd 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 Provision Information i.e., Provision Information and Fubon Financial go up and down completely randomly.
Pair Corralation between Provision Information and Fubon Financial
Assuming the 90 days trading horizon Provision Information is expected to generate 1.84 times less return on investment than Fubon Financial. In addition to that, Provision Information is 1.24 times more volatile than Fubon Financial Holding. It trades about 0.01 of its total potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.02 per unit of volatility. If you would invest 9,080 in Fubon Financial Holding on September 20, 2024 and sell it today you would earn a total of 110.00 from holding Fubon Financial Holding or generate 1.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Provision Information CoLtd vs. Fubon Financial Holding
Performance |
Timeline |
Provision Information |
Fubon Financial Holding |
Provision Information and Fubon Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Provision Information and Fubon Financial
The main advantage of trading using opposite Provision Information and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provision Information 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.Provision Information vs. Insyde Software | ||
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Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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