Correlation Between Fubon Taiwan and HOYA Resort
Can any of the company-specific risk be diversified away by investing in both Fubon Taiwan and HOYA Resort 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 Fubon Taiwan and HOYA Resort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon Taiwan Technology and HOYA Resort Hotel, you can compare the effects of market volatilities on Fubon Taiwan and HOYA Resort 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 Fubon Taiwan with a short position of HOYA Resort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Taiwan and HOYA Resort.
Diversification Opportunities for Fubon Taiwan and HOYA Resort
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fubon and HOYA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Taiwan Technology and HOYA Resort Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA Resort Hotel and Fubon 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 Fubon Taiwan Technology are associated (or correlated) with HOYA Resort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA Resort Hotel has no effect on the direction of Fubon Taiwan i.e., Fubon Taiwan and HOYA Resort go up and down completely randomly.
Pair Corralation between Fubon Taiwan and HOYA Resort
Assuming the 90 days trading horizon Fubon Taiwan Technology is expected to generate 0.98 times more return on investment than HOYA Resort. However, Fubon Taiwan Technology is 1.02 times less risky than HOYA Resort. It trades about -0.04 of its potential returns per unit of risk. HOYA Resort Hotel is currently generating about -0.27 per unit of risk. If you would invest 19,055 in Fubon Taiwan Technology on September 4, 2024 and sell it today you would lose (240.00) from holding Fubon Taiwan Technology or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Taiwan Technology vs. HOYA Resort Hotel
Performance |
| Timeline |
| Fubon Taiwan Technology |
| HOYA Resort Hotel |
Fubon Taiwan and HOYA Resort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Taiwan and HOYA Resort
The main advantage of trading using opposite Fubon Taiwan and HOYA Resort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Taiwan position performs unexpectedly, HOYA Resort 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 HOYA Resort will offset losses from the drop in HOYA Resort's long position.| Fubon Taiwan vs. Vanguard International Semiconductor | Fubon Taiwan vs. Davicom Semiconductor | Fubon Taiwan vs. Tex Ray Industrial Co | Fubon Taiwan vs. Fu Burg Industrial |
| HOYA Resort vs. Formosa International Hotels | HOYA Resort vs. Ambassador Hotel | HOYA Resort vs. FDC International Hotels | HOYA Resort vs. First Hotel Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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