Correlation Between Taiwan Paiho and Fulgent Sun

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

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

Diversification Opportunities for Taiwan Paiho and Fulgent Sun

-0.7

Correlation Coefficient

Taiwan Paiho  Fulgent Sun

Excellent diversification

The 3 months correlation between Taiwan and Fulgent is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Paiho and Fulgent Sun International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulgent Sun International and Taiwan Paiho 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 Taiwan Paiho are associated (or correlated) with Fulgent Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulgent Sun International has no effect on the direction of Taiwan Paiho i.e., Taiwan Paiho and Fulgent Sun go up and down completely randomly.

Pair Corralation between Taiwan Paiho and Fulgent Sun

Assuming the 90 days trading horizon Taiwan Paiho is expected to under-perform the Fulgent Sun. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Paiho is 1.23 times less risky than Fulgent Sun. The stock trades about -0.06 of its potential returns per unit of risk. The Fulgent Sun International is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Fulgent Sun International on October 4, 2024 and sell it today you would lose (250.00) from holding Fulgent Sun International or give up 2.05% of portfolio value over 90 days.

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

Taiwan Paiho  vs.  Fulgent Sun International

Taiwan Paiho

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fulgent Sun International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Taiwan Paiho and Fulgent Sun

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

The idea behind Taiwan Paiho and Fulgent Sun International 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 Global Correlations module to find global opportunities by holding instruments from different markets.