Correlation Between Armada Hflr and Fubon MSCI

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

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

Diversification Opportunities for Armada Hflr and Fubon MSCI

0.66

Correlation Coefficient

Armada Hflr  Fubon MSCI

Poor diversification

The 3 months correlation between Armada and Fubon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr 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 Armada Hflr 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 Armada Hflr Pr 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 Armada Hflr i.e., Armada Hflr and Fubon MSCI go up and down completely randomly.

Pair Corralation between Armada Hflr and Fubon MSCI

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Fubon MSCI. In addition to that, Armada Hflr is 1.62 times more volatile than Fubon MSCI Taiwan. It trades about -0.2 of its total potential returns per unit of risk. Fubon MSCI Taiwan is currently generating about -0.07 per unit of volatility. If you would invest  14,430  in Fubon MSCI Taiwan on December 22, 2024 and sell it today you would lose (730.00) from holding Fubon MSCI Taiwan or give up 5.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.44%
Values	Daily Returns

Armada Hflr Pr  vs.  Fubon MSCI Taiwan

Armada Hflr Pr

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 fairly stable basic indicators, Fubon MSCI is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Armada Hflr and Fubon MSCI

The main advantage of trading using opposite Armada Hflr and Fubon MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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 Armada Hflr Pr 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.